Dear CRO: Please step up, or step down
by Alex Marcuson
There may be trouble ahead…
With its decidedly blunt approach, the PRA’s season’s greetings letter to CROs should prove to be a bracing wake-up call. Having set out in Janet and John terms last year (to Chief Actuaries and CEOs) that firms seem to be weakening their reserves, the PRA is unimpressed with the homework that the industry has handed in.
No room at the inn?
The reader is left with a sense that the PRA worries that some CROs (and given that these are aggregate market stats, some large firm CROs) are failing to see the big picture. Or perhaps they are, but their advice is not being acted upon by boards.
Time and again, soft‑market reserving results in a blame game amongst stakeholders.
CROs need to ensure that their board reports address the PRA’s concerns directly and clearly. Doing so means that NEDs have the necessary information to shoulder the tough decisions required in response.
With the PRA intending a sharpened focus on these areas (s166 anyone?), is now the time to get a fresh view on how you are addressing these issues?