On behalf of Wolfgang Rief from Rief Insurance Solutions, the Board of the Polish Actuarial Association has the pleasure to invite its members and members of the CEE actuarial associations to its complimentary „Open Floor” series webinar, „What can make insurers fail.”
About the seminar:
Ever more frequent global shocks signal an era of disruption and a more complex risk map also for insurers. Within the past 5 years insurers faced impacts from extreme shock waves (e.g. from low interest rates to high interest rates, inflation, recession, Covid 19 pandemic, geopolitical impacts like the invasion of Ukraine, cyber risk, not to mention the overarching topic of climate change, etc. etc.). One could even argue that insurers are undergoing a permanent ‘real life stress testing’. However, despite all these threats and challenges insurers generally fared well, as can be seen from a relatively low impact on insurance ratings. This is especially true for insurers in mature markets, whereas the credit quality of insurers in emerging markets was impacted to some higher extent.
Based on studies from rating agency S&P and EIOPA insurers seldom fail. Based on S&P data insurers also show the lowest default rates of all rated sectors; they also demonstrate the highest average rating levels.
However, in addition to defaults insurers can also suffer from so-called near misses, i. e. situations where insurers are in significant troubles, but do not fail, as often they are saved e.g. by merger & acquisition activities.
The presentation will also give some insight into the various causes of default and near-miss situations, and what we can learn from these cases.
The credit quality of insurers appears to be generally stronger than that of enterprises in other industries. This will be demonstrated by a theoretical comparison of business models of insurers with banks.
A high level of financial strength proves to be an important feature for successful insurers. Typically, financially stronger companies can rely on well diversified businesses, and importantly also have the size and financial means to invest into strategies, digitalization and innovations. This again may provide the opportunity to offer better products and services. In contrast weaker companies may become weaker and weaker and become targets for take-overs.
Ratings are recognized methods to assess the financial strength and thus the sustainability (here meaning fitness for future) of insurers. The presentation will give some insight how ratings are produced and which key issues they address.
Insurance is basically about risk taking and risk mitigation. In this context Enterprise Risk Management (ERM) on one hand is a key tool to help detecting and preventing exposures to inappropriate risk taking. On the other hand advanced ERM may help develop future oriented risk reward strategies.
About the speaker:
Wolfgang Rief is the principal of Rief Insurance Solutions, since 2012 successfully specializing on advisory for insurance ratings and related topics.
Advisory is offered to companies which already have a rating, aspire a rating, or would like to understand, in which rating league they might play. Such service could also include a check of a company’s strategy by applying the methods generally used for ratings. An additional offer are focused lectures and discussions with boards or expert staff.
Experience is primarily based on more than 10 years activities as the principal of Rief Insurance Solutions, 12 years as director in the Frankfurt office of Standard & Poor’s, and 20 years with the international Gerling Insurance Group.
Wolfgang is a lecturer at Goethe University Frankfurt am Main, and holds a diploma in business administration from the University of Cologne.
When: 22 November 2023 (Wednesday) at 17.00 CET, Zoom meeting (https://zoom.us/j/92108127857 no password or registration required).
Duration: the webinar is expected to last 60-70 minutes, including the Q&A.
Technical remarks:
