Asset management for insurers
A brave new world
Adapting to change is one of mankind’s greatest skills, and the insurance industry’s limits are being tested by some of the most challenging changes in its history. These include:
- Demographic changes, with people on average living longer and thereby impacting the pension- and healthcare-related insurance products
- Historically low interest rates, creating a double whammy of increasing liabilities and limited income
- A number of new regulations: Dodd-Frank/EMIR, CRD4, AIFMD, IFRS and Solvency II
Solvency II introduces a market-based approach for the valuation of insurers’ assets and liabilities. At the core of the new directive is a risk-weighted assessment of an insurer’s assets and a calculation of its capital requirements. The directive requires insurers to implement process, governance, and information flows for identifying and quantifying their investment risks in a coherent framework, a framework that is embedded in strategic decision-making processes.
As the 1 January 2016 start date for the implementation of Solvency II quickly approaches, European insurers are starting to realize the full impact of this new EU directive on their investment operations, strategies, governance, and reporting practices.
This article illustrates how insurance investment management is affected and where the 4,300 European insurers with combined assets under management of €7,000 billion may need to revisit their current way of working.
Performance magazine issue 18, September 2015
Performance is a triannual digest, dedicated to investment management professionals, which brings you the latest articles, news and market developments from Deloitte’s professionals and clients.