Tag Archives: Rik van Beers

Capital management and reinsurance considerations

Life insurance companies face multiple risks that evolve over time and they must hold capital as a buffer against these risks. Capital management is an increasingly important topic for insurers as they look to find ways to manage their risks and the related capital requirements and to optimise their solvency balance sheets.

Given the traditionally long-term nature of the insurer’s liabilities, effective capital management can be complex. Insurers may face capital pressure due to their solvency coverage level, shareholder demands, regulatory concerns, etc. Reinsurance is one of the key capital management tools available to insurers. Several reinsurance structures are available, each with its own advantages and disadvantages and requiring experience and expertise to make optimal decisions.

In this paper, Milliman professionals explore a range of reinsurance strategies that could be used by life insurers for capital management purposes. They investigate more common reinsurance strategies along with new developments and innovative strategies that could be implemented by companies.

Determining the Fair Value of insurance liabilities under IFRS 17

While the implementation date for International Financial Reporting Standard (IFRS) 17 is still two years away, the deadline is a relatively short one considering the significant changes required to companies’ financial reporting results, systems, and processes.

In their first sets of accounts under the new regime, companies need to show a restated balance sheet on an IFRS 17 basis as at the expected transition date of 1 January 2021. The calculation of the Contractual Service Margin (CSM) at the transition date is proving to be one of the most complicated parts of the regime’s implementation. Milliman’s Andrew Kay, Joseph Sloan and Rik van Beers provide perspective in this briefing note, which focuses on the Fair Value Approach to transition.