Solvency II partnership

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Working together in partnership - Munich Re

Working together in partnership to deal with Solvency II

Solvency II poses huge challenges for our clients: risk management expenditure will rise and risk capital requirements will tend to increase. Risk-transfer solutions will have to be geared even more than before to individual portfolios and balance-sheet profiles and will need to be very flexible. Munich Re provides its clients with support every step of the way.

The implementation of Solvency II will involve a great deal of effort from the European insurance markets. At the same time, the new set of rules will enable insurers to be more precise in recording their risk exposure, to control risks better, and to gear capital allocation more closely to their own safety and return targets.

It will be crucial for individual insurers to identify those classes and products that consume large amounts of risk capital but do not create sufficient long-term added value for the company. In non-life, for example, this may involve products with high exposure to catastrophe, with particularly volatile claims experience or with long run-off periods. Options for action include adjusting, restricting or discontinuing certain products or introducing new ones to achieve greater diversification effects.

Achieving success together
The higher demand for customised solutions will change the way cedants, reinsurers and brokers interact. Only through close cooperation will it be possible to develop solutions that not only cover capital requirements but also support strategic goals, such as more professional risk management, reduced result volatility, diversification and profitable growth. As a result, traditional, substantially standard reinsurance programmes will make way for solutions finely tailored to their risk profiles and balance sheets.

What does this mean for our clients? Since reinsurance will become a key capital and risk management tool, any reinsurance structure will have to take account of these two aspects, which will create additional challenges for many clients at a time when they are already more than fully occupied with the multi-faceted preparations for Solvency II.

Munich Re therefore provides advice and solutions for the whole spectrum, from preparing for the changed regulatory environment to developing customised solutions, and from traditional reinsurance programmes to alternative securitisation approaches.

Tools

  • RISA (Reinsurance under the Standard Approach)
  • PODRA (PillarOne Dynamic Reinsurance Analysis)

Publications
The regular “Knowledge Series” publications provide an information basis and a comprehensive, professional overview of current Solvency II topics.

Publications


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This publication is available exclusively to Munich Re clients. Please contact your Client Manager.