It was raining comment on the Thomson ILS news today (may need to subscribe, but it's free and worth it). Both van Hulle and Bernadino are quoted as playing down the significance of any decisions made on SIFIs, or "too big to fail" insurance institutions (as I recall there is some kind of decision pending, or may indeed have been released, on SIFI criteria).
Sr. Bernadino (our EIOPA big-hitter) is more concerned with low investment return and high inflation than the threat of SIFI classification on the insurers under his watch, while the thought of additional capital burdens for any EU insurers that qualify as SIFIs is "complete nonsence" to van Hulle, the Commission's Solvency II scribe.
This all despite KBW claiming that only a couple of insurers will fall inside the net (though I think this may have been US-HQd only).
Finally, AM Best got in on the act after the delays announced to Solvency II implementation last week - as well as highlighting the benefits of preparedness from a mergers and acquisitions angle (which may now also be put back a year), they also add that, while smaller companies are probably happy to receive an additional year of prep-time, the larger companies "may chafe" at the delay.
I have a nice cream for that...
An online repository for Solvency II, ERM and Corporate Governance material and comment from the Principal of Governance Matters, an independent Risk Consultancy firm based on the Isle of Man.
Showing posts with label AM Best. Show all posts
Showing posts with label AM Best. Show all posts
Monday, 17 October 2011
NAIC, ORSA, ERM and SRQ - Acronym day!
Saw this nice piece from Towers Watson on ERM developments Stateside (I had blogged on this from an ORSA perspective a couple of weeks ago). The pressure from the AM Best ratings agency seems to be pretty intense to this regard, and indeed Towers Watson's article here highlights what AM Best consider "leading" and "lagging" practices.
"Leading" practices have all the hallmarks of the IAIS/Solvency II world that we all know and love ("tolerance", "appetite", "risk-adjusted return", "modelling used in strategic decision making" etc etc). What is more enlightening is the section on "lagging" practices, as it seems pretty bold to say that by not adhering to the AM Best standards you are a laggard.
However, the stats are pretty sobering (and mouthwatering if you are consulting over there!). 90% of respondents' risk tolerance definitions were "too broad", 12% had no ERM Committee/CRO and 72% do not use internal models.
Towers (who have issued guidance on the 2010 iteration) go as far as to say that the new ERM section on Best's SRQ (Supplementary Ratings Questionnaire) will '...become more influential on ratings outcomes' and that this evolution will compel insurers to 'stay ahead of their peers and Best's evolving ERM criteria'. How the SRQ obligations marry into the ORSA guidance due out soon is another thing, but fascinating times ahead for the North Americans...
"Leading" practices have all the hallmarks of the IAIS/Solvency II world that we all know and love ("tolerance", "appetite", "risk-adjusted return", "modelling used in strategic decision making" etc etc). What is more enlightening is the section on "lagging" practices, as it seems pretty bold to say that by not adhering to the AM Best standards you are a laggard.
However, the stats are pretty sobering (and mouthwatering if you are consulting over there!). 90% of respondents' risk tolerance definitions were "too broad", 12% had no ERM Committee/CRO and 72% do not use internal models.
Towers (who have issued guidance on the 2010 iteration) go as far as to say that the new ERM section on Best's SRQ (Supplementary Ratings Questionnaire) will '...become more influential on ratings outcomes' and that this evolution will compel insurers to 'stay ahead of their peers and Best's evolving ERM criteria'. How the SRQ obligations marry into the ORSA guidance due out soon is another thing, but fascinating times ahead for the North Americans...
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