Brussels Talk - Autumn 2011

Financial Modelling

In this Insights issue, we present the highlights of the new MoSes release 6.5. Our goal with this release has been to provide several MoSes functionality enhancements suggested by clients as well as further improve the general usability of the system. We continue with an article on the importance of early consideration of the forthcoming IFRS for insurance contracts. We end with a tutorial on aggregation submodels. Read more or contact Jan De Roeck for further details.

Challenges and opportunities in a world of risk

Regulation and wider pressures for more effective risk management across the financial services sector are changing the nature and potential influence of the work carried out by actuaries. The 2011 Towers Watson European Actuarial Directors’ Forum set out to explore the challenges and opportunities these changes are bringing and how the attendees regard them. Read more or contact Jan De Roeck for further details.

Capital Management

Effective and efficient capital management has always been an important consideration in managing both life and property and casualty (P&C) insurance companies. However, the need for insurers to focus on target capital levels, the type and mix of capital used and its distribution among companies within insurance groups is increasing. A new regulatory word is emerging, focused on economic and risk-based regulation, in which capital management is becoming inseparable from risk management. This is particularly (but not only) the case in the European Union (EU) where the new Solvency II regime is being introduced.

In this new world, the available tools in the capital management tool box need to be sharpened and adapted (or sometimes even replaced) to remain effective. Companies that actively address this are likely to gain a significant competitive advantage, not just in terms of their profitability and return on capital, but also in their long-term viability.

In light of the ever-changing regulatory environment, this paper analyses how companies need to adapt to ensure they have an efficient and effective capital structure. Read more or contact Jan De Roeck for further details.

Extreme Risk Planning

Extreme risks are potential events that are very unlikely to occur (therefore infrequent) but could have a significant impact on economic growth and asset returns, should they happen. In this edition of the research entitled Extreme Risks - the 2011 update (following on from our 2009 paper) we have updated our likelihood and impact assessment to reflect the disappointing economic recovery in the developed world during the past two years which we believe increases the likelihood of further economic shocks. Accordingly, we have moved sovereign default from ‘Medium’ impact to ‘High’ impact and recent developments – both economic and political – in the euro area suggest that a break-up of the euro is more likely, so it has moved this risk from ‘Very low’ to ‘Low’. As our thinking has developed during the past two years, we have added two new extreme risks resource scarcity and infrastructure failure which replace the end of capitalism and excessive leverage. Read more or contact Jan De Roeck for further details.

Latest Emphasis editions

Our latest publications on the insurance industry:
June 2011 edition
September 2011 edition