December 10th, 2009

A Survey of Capital Allocation Metrics: Conclusion

Posted at 1:00 AM ET

Susan Witcraft, Managing Director, Financial Intelligence Team, Instrat

Insurers have choices in evaluating how to allocate capital and its cost. The ultimate goal is to strike a balance between feasibility (based on management acceptance and effort) and capital optimization. Eventually, most companies are likely to migrate towards contribution methods, along the lines of co-xTVaR and the shared asset approach, with thresholds varying with the specific questions being reviewed and specific corporate risk tolerances.


Previous articles in this series:

Part I: Introduction >>

Part II: Illustration >>

Part III: Standard Deviation >>

Part IV: Covariance >>

Part V: Co-xTVaR >>

Part VI: Shared Asset >>

Part VII: Comparison >>

Click here to receive the rest of this series by e-mail >>

Click here to learn more about capital management >>

Guy Carpenter & Company, LLC provides this material for general information only. Guy Carpenter & Company, LLC makes no representations or warranties, express or implied. The information is not intended to be taken as advice with respect to any individual situation and cannot be relied upon as such.

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