{
  "id": "term-hurdle-rate",
  "type": "term",
  "languages": {
    "en": {
      "id": "term-hurdle-rate",
      "lang": "en",
      "type": "term",
      "title": "Hurdle Rate (Hurdle Rate)",
      "shortDefinition": "The hurdle rate is the minimum required return on capital demanded by investors or management that a business, underwriting line, or investment project must achieve to be considered value-creating.",
      "synonyms": [
        "Minimum Required Return",
        "Cost of Capital Rate"
      ],
      "linesOfBusiness": [
        "All lines"
      ],
      "jurisdictions": [],
      "tags": [
        "Capital Management",
        "Actuarial"
      ],
      "relations": {
        "relatedTerms": [
          "term-hartmarkt-weichmarkt"
        ],
        "partOf": [],
        "appliesTo": [],
        "regulatedBy": [],
        "relevantFor": [],
        "insurableVia": [],
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        "comprises": [],
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        "complementedBy": []
      },
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      "standards": [],
      "reviewStatus": "expert-reviewed",
      "reviewedBy": "Guido Hesse, Hesse Group Holding AG",
      "lastReviewed": "2026-09-04",
      "version": "0.1.0",
      "updated": "2026-08-31",
      "generated": {
        "by": "process:reconstructed",
        "at": "2026-08-31T00:00:00.000Z"
      },
      "verified": [
        {
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      "staleAfter": null,
      "url": "https://hgh.ch/lexikon/en/knowledge/term/hurdle-rate/",
      "alternateUrl": "https://hgh.ch/lexikon/de/wissen/begriff/hurdle-rate/",
      "body": "## Concept\n\nThe hurdle rate is the minimum return on capital employed that an insurer or reinsurer uses as a benchmark for evaluating underwriting lines, investment projects, or business units. It is typically derived from the cost of capital, reflecting the return expectations of capital providers given the risk assumed.\n\n## Application in Capital Allocation\n\nIn risk-based capital allocation, a business unit's actual risk-adjusted return (e.g., measured as return on risk-adjusted capital, RORAC) is compared against the hurdle rate: business that fails to meet the hurdle rate is considered value-destroying, while business exceeding the hurdle rate contributes to the company's value creation. This comparison is a central element of value-based management in the insurance industry.\n\n## Relationship to the Market Cycle\n\nThe hurdle rate significantly influences underwriting discipline across the market cycle: in soft market phases with falling premium rates, underwriters must scrutinize particularly carefully whether business continues to meet the required minimum return, whereas in hard market phases, a greater share of business tends to exceed the hurdle rate."
    },
    "de": {
      "id": "term-hurdle-rate",
      "lang": "de",
      "type": "term",
      "title": "Hurdle Rate (Mindestrenditeanforderung)",
      "shortDefinition": "Die Hurdle Rate ist die von Investoren oder dem Management geforderte Mindestrendite auf das eingesetzte Kapital, die ein Geschäft, eine Zeichnungslinie oder ein Investitionsprojekt erzielen muss, um als wertschaffend zu gelten.",
      "synonyms": [
        "Mindestrenditeanforderung",
        "Minimum Required Return"
      ],
      "linesOfBusiness": [
        "All lines"
      ],
      "jurisdictions": [],
      "tags": [
        "Kapitalmanagement",
        "Aktuariat"
      ],
      "relations": {
        "relatedTerms": [
          "term-hartmarkt-weichmarkt"
        ],
        "partOf": [],
        "appliesTo": [],
        "regulatedBy": [],
        "relevantFor": [],
        "insurableVia": [],
        "mitigatedBy": [],
        "comprises": [],
        "alternativeTo": [],
        "complementedBy": []
      },
      "attribute": null,
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      "standards": [],
      "reviewStatus": "expert-reviewed",
      "reviewedBy": "Guido Hesse, Hesse Group Holding AG",
      "lastReviewed": "2026-09-04",
      "version": "0.1.0",
      "updated": "2026-08-31",
      "generated": {
        "by": "process:reconstructed",
        "at": "2026-08-31T00:00:00.000Z"
      },
      "verified": [
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      ],
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      "url": "https://hgh.ch/lexikon/de/wissen/begriff/hurdle-rate/",
      "alternateUrl": "https://hgh.ch/lexikon/en/knowledge/term/hurdle-rate/",
      "body": "## Begriff\n\nDie Hurdle Rate ist die Mindestverzinsung des eingesetzten Kapitals, die ein Versicherer oder Rückversicherer als Massstab für die Bewertung von Zeichnungslinien, Investitionsprojekten oder Geschäftsbereichen verwendet. Sie leitet sich in der Regel aus den Kapitalkosten (Cost of Capital) ab, die die Renditeerwartungen der Kapitalgeber unter Berücksichtigung des eingegangenen Risikos widerspiegeln.\n\n## Anwendung in der Kapitalallokation\n\nIn der risikobasierten Kapitalallokation wird die tatsächliche risikoadjustierte Rendite einer Geschäftseinheit (z. B. gemessen als Return on Risk-Adjusted Capital, RORAC) der Hurdle Rate gegenübergestellt: Geschäft, das die Hurdle Rate nicht erreicht, gilt als wertvernichtend, während Geschäft oberhalb der Hurdle Rate zur Wertschöpfung des Unternehmens beiträgt. Diese Betrachtung ist ein zentrales Element des wertorientierten Managements in der Versicherungswirtschaft.\n\n## Zusammenhang mit dem Marktzyklus\n\nDie Hurdle Rate beeinflusst massgeblich die Zeichnungsdisziplin über den Marktzyklus hinweg: In Weichmarktphasen mit sinkenden Prämienraten müssen Zeichner besonders sorgfältig prüfen, ob Geschäft weiterhin die geforderte Mindestrendite erzielt, während in Hartmarktphasen tendenziell mehr Geschäft die Hurdle Rate übertrifft."
    }
  }
}