September 3rd, 2009

2009 YTD: Top ERM and Capital Management Stories

Posted at 1:00 PM ET

With Rendez-Vous 2009 coming to Monte Carlo next week, review the top stories of the year on ERM and capital management below.

Risk Profile, Appetite and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of Enterprise Risk Management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

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(April 30, 2009)

Dynamic Holistic Market Security: It’s hardly surprising that market security has become a greater priority for cedents around the world. Both natural perils and financial catastrophes have resulted in a substantial reduction in the aggregate amount of capital available in the insurance industry. While the business environment was generally stable, most carriers realized that they needed to prepare for the unimaginable. Counterparty credit risk is now approached with a heightened level of concern and diligence. At the January 1, 2009 renewal, reinsurers began to take a holistic view of the reinsurer, a trend that is unlikely to abate in the near future.

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(April 14, 2009)

Five Ways to Allocate Capital: No single approach to capital allocation is objectively superior. Those that are more effective require an investment of time and resources, while the simpler methods sacrifice accuracy. A tradeoff is required based on a (re)insurer’s priorities and capabilities. Before you make a choice, however, be sure you’re aware of the alternatives.

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(August 19, 2009)

Five Ways to Make Your Capital More Productive: The financial catastrophe may be almost a year behind us, but we’re still dealing with the effects. Capital remains constrained, and it will be a while before balance sheets return to early 2008 levels. (Re)insurers have had to learn to do more with less — deploying limited capital in a way that maximizes earnings and reaches challenging return on equity (ROE) targets. With MetaRisk®, Guy Carpenter’s economic capital model, you can delve into the scenarios that could mean the difference between capital productivity and missed opportunity.

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(July 29, 2009)

Capital Management: a five-part series:

A Renewed Priority >>
(March 16, 2009)

Zero in: Target Capitalization >>
(March 17, 2009)

Quantify Capital Risks >>
(March 18, 2009)

Strength in Numbers >>
(March 19, 2009)

Concluding Thougths >>
(March 20, 2009)

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