Underwriting Capacity
The amount of room you have on your butt for tattoos. Also, a term related to insurance companies.
Underwriting represents the basic business of an insurance company. Selling you a policy for your jet ski is an act of underwriting for the insurer. The term "underwriting capacity" refers to the amount of underwriting a company can do. Fundamentally, it asks the question: how much insurance can we give out? Or, to put it another way: how much risk can we take on?
The underwriting capacity has to do with the company's balance sheet. It has to do with the amount of assets the company has available to take care of claims, as they come up.
Say you get insurance on your $25,000 car. If a helicopter lands on the vehicle and absolutely smushes it, the insurance company would be out $25,000...total loss. If the company has $3 million on its balance sheet available to pay for claims, it could write 120 of those $25,000 policies.
In real life circumstances, the math gets more complicated. It would be extremely unlikely for all 120 cars that the insurance company has insured to get totaled at once. The insurance company would have some equation it would use to calculate the safe reserves needed to cover the number of cars they have policies for. Crunching all the numbers, an insurance company will come up with the amount of risk it can afford to take on based on its underlying balance sheet. This number ($10 million, $500 million, $3 billion, whatever) represents its underwriting capacity. The bigger the balance sheet, the more underwriting capacity a company has.
Meanwhile, the bigger you get, the less competition there is. This situation matters when you get to mega catastrophic insurance. Like, NASA calls and says, "Hey, we need a policy on our $200 billion space station." Berkshire Hathaway represents the clearest example of a player in this mega catastrophic space. Because it has a uniquely expansive balance sheet, it doesn't have much (or any) competition on the very high end, making the business extremely lucrative for them. They have a vast amount of underwriting capacity, allowing them to take on policies no one else can.