Capital management strategies are critical for carriers as they need to find the proper balance between allocating capital to potential past losses and deploying it now to support business growth in a hard market, according to Christopher Ross, Managing Director, Guy Carpenter.
We see a few ways to address this requirement through Guy Carpenter’s solutions:
- Increase the use of traditional reinsurance going forward
- Raise capital
- Release capital on prior years via the use of adverse development covers (ADCs) or loss portfolio transfers.
Given the challenges we have outlined on how to pivot from portfolio protection to growth we fully expect these will continue through 2020 and 2021. Increasing the certainty of profitability (lowering volatility of earnings) will be valued ever more by investors, and finding the right balance and solutions are critical to solving that problem.
Guy Carpenter’s broking and analytical teams provide insight using the sector’s most tailored solutions and best strategic advisory services as we provide guidance to clients through the January 2021 renewal cycle.