Brexit – 5 key priorities for Insurers

It is still early days, but the recent Brexit vote presents us with uncertain times ahead. Below I have set out some practical ideas for insurers to consider while the dust settles. 1.  Impact of FX movements on business plans, balance sheets and internal models.  Whenever there is a significant FX swing, particularly between Sterling… Continue reading>

Emerging market exchange rates

The recent political turmoil in Crimea and the resulting trade sanctions led to reports of significant movements in the Russian Rouble.  The news prompted us to review the history of one-year foreign exchange rate movements for the Rouble along with a number of the high-growth economies to see whether they had proved more volatile on… Continue reading>

PPO Liabilities: modelling mortality risks

There are a lot of uncertainties inherent in the valuation and capital modelling of Periodical Payment Order (“PPO”) liabilities.  Not only is there no perfect hedge for the inflation indices applied to them, there is also very limited data upon which to base mortality models. While much has been written on the challenges presented by… Continue reading>

PRA Consultation Paper CP7/14

Solvency II: calculation of technical provisions and the use of internal models for general insurers This consultation paper was issued by the PRA in March 2014.  It is a short, accessible read and contains several helpful pointers to firms as they prepare for Solvency II.  The scope of the note is the set of general… Continue reading>

Changes in energy import/export patterns

There is a new paradigm evolving in energy requirements which will has potentially huge structural implications across several industries. This is illustrated in the graph below. We think insurance will be affected in several ways, here are just a few possible consequences: Acceleration in US economic recovery and resulting consequences of interest rate normalisation on… Continue reading>

Inflation challenges

We thought these two charts prepared using recent data from the UK Office for National Statistics tell an interesting tale: unstable and possibly declining inflation over the last few years coupled with a decline in real average weekly earnings over the period since the financial crisis broke. How best to capture this in pricing, reserving… Continue reading>

Tip of the Iceberg?

The recent high-profile announcement by QBE has prompted us to set down some thoughts on reserving and capital issues raised here. An open question, outside the scope of this article, is whether, it signals the first concrete sign of an approaching wave of soft-market bad news in the sector. Reserves are inherently uncertain The first… Continue reading>

Advisor rotation

This article is about whether audit and actuary rotation need to be items on a CRO’s agenda Most insurance organisations have had the same auditing firm for many years. Very few audits are actually put out to tender. As far as we can tell, in only 3 countries is there a mandatory requirement to change… Continue reading>

Top trends to look out for in 2013

What do we do now? With Solvency II being put back for two, three, four or maybe more years, firms now have a chance to scale back their programmes and focus on the usual business objectives of making profits and looking after customers. We think it will prove a mistake for firms to pull the… Continue reading>