December 16th, 2009

ERM Offers Competitive Compliance for Solvency II, Part III

Posted at 1:00 AM ET

mango_smallDon Mango, Chief Actuary
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For Solvency II, regulators have not yet announced plans to approve specific software platforms. Instead, they will focus on the model’s capabilities, embeddedness, implementation and use. For example, Guy Carpenter’s proprietary economic capital model MetaRisk® can be used as the basis for an internal model for Solvency II. MetaRisk is among the fastest, most robust and easiest solutions to use in the (re)insurance industry, making it possible to model countless combinations of risk and capital, identifying the optimal levels and enabling companies to make the allocation decisions that will yield the most favorable results for a given risk tolerance profile.

Whether the primary goal is improved capital management, ERM or regulatory compliance - or some combination thereof - an effective capital model can highlight the courses of action best aligned with a company’s financial objectives, from return on equity targets to increases in shareholder value. Not only does disciplined, rigorous capital modeling provide carriers with an array of choices, it informs the effort, showing the range of outcomes associated with every capital management decision.

The (re)insurance industry is mature and competitive, leaving few ways for one company to gain an edge. A comprehensive ERM framework - encompassing risk identification, capital modeling and savvy decision-making - can be a differentiator in this environment. Every dollar of capital applied to risk will become even more important, so anything short of optimal capital deployment constitutes a missed opportunity. Competition and compliance are making the stakes higher than ever, making the right capital model essential to securing a leading position in the industry.

 

Previous articles from this series:

ERM Offers Competitive Compliance for Solvency II, Part I >>

ERM Offers Competitive Compliance for Solvency II, Part II >>

 

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Statements concerning, tax, accounting, legal or regulatory matters should be understood to be general observations based solely on our experience as reinsurance brokers and risk consultants, and may not be relied upon as tax, accounting, legal or regulatory advice which we are not authorized to provide. All such matters should be reviewed with your own qualified advisors in these areas.

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