Here we review recent GC Capital Ideas stories that have touched on issues relating to the Solvency II regime.
Posts Tagged ‘MetaRisk’
Here we highlight recent GC Capital Ideas stories on enterprise risk management.
Guy Carpenter Launches MetaRisk® 7.1: Guy Carpenter today announced the release of MetaRisk® 7.1, the latest version of the firm’s premier risk and capital management decision making tool. The platform offers access to a variety of new features and enhancements that will improve usability, increase overall functionality and enable the development of more accurate and efficient risk and capital models.
Risk Preference Function - Embedding Risk-Reward in Capital Allocation: Capital allocation decisions are among the most important decisions made by company management. Through our own research and thought leadership and our observance of best practices at clients around the world, Guy Carpenter’s Enterprise Risk Management Advisory practice has compiled a set of leading practices around capital allocation for (re)insurers.
Guy Carpenter today announced the release of MetaRisk® 7.1, the latest version of the firm’s premier risk and capital management decision making tool. The platform offers access to a variety of new features and enhancements that will improve usability, increase overall functionality and enable the development of more accurate and efficient risk and capital models.
Here we highlight recent stories that have appeared on GC Capital Ideas discussing trends around capital models.
Guy Carpenter is uniquely positioned to help clients successfully grow their business in emerging markets. Our GC Global Analytics and Advisory team offers services and solutions that include industry-leading risk analytics, strategic and technical advice and capital advisory. We employ over 300 modeling, actuarial and advisory professionals through our GC Analytics®**, Global Advisory and GC Securities* teams who closely collaborate with Guy Carpenter’s global broking force to deliver the best insights and growth opportunities to our clients. We encourage you to contact your Guy Carpenter representative to review and discuss your modeling, advisory and capital needs in more detail. Among the specific services and tools we utilize and offer are proprietary modeling, the i-aXs® data management platform, MetaRisk®, portfolio management, predictive analytics, advisory services and actuarial expertise.
Paul Silberbush, Managing Director
Capital models are becoming more and more “embedded” into property and casualty (re)insurers’ business processes. These models are typically constructed with two distinct and often contrasting purposes: 1) measuring capital for rating agency and/or regulatory requirements and 2) risk management and strategic business planning.
A robust capital model can be a great tool to help run a (re)insurance business. It is a given that capital models rely on a huge wealth of assumptions, and it is the quality of these assumptions that determine how useful the model is. There is an emphasis on those assumptions that are explicit, for example, catastrophe model outputs, premium rates and reserve volatility. But there is another type of assumption - that which is implicit. These assumptions can have a very material impact on the model results.
The difficult 2012 renewals were a culmination of a challenging 12 months for the (re)insurance sector. The heavy catastrophe losses of 2011 came at a time (re)insurers faced serious economic headwinds, with subdued and historically low interest rates. Concern also remains over the sovereign debt crisis in Europe and the prospect of higher inflation in certain key economies. 2012 is likely to be another challenging year for the sector, but growth opportunities exist for companies that have the industry’s best tools, advice and analysis at their disposal.
As Karen Clark, founder of AIR and now an independent consultant, has said, “the black box started out as a useful tool for decision making, but then it grew to be very big and very powerful; the black box now makes the decisions (4).” While somewhat hyperbolic, there is also much truth to this aphorism. Models are tools, and a good tool user understands the strengths and limitations of the tool.
Solvency II will profoundly impact the reinsurance market, though perhaps not exactly in the ways reinsurers or regulators have anticipated. This impact will not be limited to European reinsurance markets, but will be felt globally. Advances in disclosure and overall market strength will come with costs, including a more volatile pricing environment.