Capital allocation – driving business engagement

Our client, a small Lloyd’s managing agency within an international re/insurance group was struggling to get business engagement with the output of their newly-built capital model. They asked us to guide them in designing a capital allocation framework that could support discussions surrounding underwriter targets and performance assessment.

We reviewed this insurer’s existing capital allocation models and identified a number of improvements that enabled them to be more usable. This involved helping them to make compromises over technical purity so that they could get buy-in to the results to support future business-planning discussions with underwriters and senior management. We then assisted our client in implementing these recommendations in practice.