Tuesday, 25 October 2011

Capital Management in the new regulatory environment - Towers Watson

A cracking piece from TW on capital management in Solvency II context, highlighting a number of critical areas for consideration as we approach ORSA public consultation. I noted;
  • Experience of the Swiss Solvency Test on capital, which TW suggest caused such an immediate shift in capital strategies to accomodate (i.e de-risking Asset/Liability mismatches and purchasing additional reinsurance), that one's current capital plans should be revisited for future-state appropriateness , and not just taken as read.
  • A suite of 7 key questions on capital management - all of these worth asking at any juncture, but even more so now.
  • The capital management toolbox depicted is worth considering in the context of potential management actions in the ORSA
  • Big section of branching and redomiciling, in the context of (publicly commented on by the head of the Irish regulator) "hub and spoke" approaches to reducing capital requirements, in the absence of the Group Support elements of early Solvency II drafts. The Central Bank is having to think specifically about the practicalities of supervising such arrangements, I guess on the premise that, with 12.5% corporation tax, they might be the main landing area for such schemes!
All in all a very good, and very timely effort

1 comment:

  1. I am happy to find distinguished way of writing the post of capital management. Now make it easy for me to understand and implement the concept. Thank you for the post.Financial Advisor Washington DC