Solvency II: Munich Re offers practical expertise and products for optimal risk-capital relief

2009/09/07

"The financial crisis has shown that you always have to be vigilant where risks are concerned. Munich Re possesses a high level of expertise in professional risk management and uses its sophisticated know-how to advise clients and to develop individual client solutions", explains Thomas Blunck, member of Munich Re’s Board of Management.

Solvency II strengthens Munich Re’s role as a reinsurer in two ways. For European insurers, the central question is how they can achieve the requisite risk-capital relief. Reinsurance will play an increasingly vital role in this respect. "Thanks to our broad and globally diversified portfolio, our risk capital costs less than that of our clients. However, companies will not always simply look for the least expensive option. Solvency II opens up a whole new range of services for reinsurers, as it affects the entire spectrum of risks to which an insurance company is exposed. This is why clients seek the expertise they need for effective risk management based on holistic corporate management. And this means a new and broader role for reinsurers. They must be able to help their clients establish and further develop their risk management", says Blunck.

It was for this reason that back in 2006 Munich Re decided to establish the Solvency Consulting Team as part of Integrated Risk Management. As a reinsurer with an outstanding position and a wealth of experience in Enterprise Risk Management, Munich Re offers its clients a wide range of advice, workshops and tools:

  • With the actuarial instrument PODRA (PillarOne Dynamic Reinsurance Analysis), the primary insurer can – on the basis of the open-source modelling software PillarOne – calculate its risk-capital requirement and the effect of various reinsurance structures.
  • ALPHA (Asset Liability Portfolio Hedge Administration), Munich Re’s innovative ALM service, has proven itself in pilot tests. Using this instrument, asset-liability-management experts have developed proposals for clients’ investment portfolios, which help to significantly improve returns or make substantial savings on risk capital.
  • Amid the flood of information, Munich Re offers insurers vital support on prioritising the key tasks in preparation for Solvency II. Munich Re’s GoST (Governance Solvency II Training) workshop helps clients to better understand the qualitative requirements of Solvency II. In the Knowledge series, a number of experts publish practical analyses and statements online.

The brisk demand from clients also gives Blunck reason to be optimistic: "Munich Re’s risk management has proven its worth during the economic crisis. Now we are using this knowledge and experience to develop products that will open up a profitable field of growth for us".

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