According to a new study by Guy Carpenter &. Co. Inc., a leading global reinsurance intermediary, as insurance companies address their ability to manage capital more efficiently to achieve greater profitability, reinsurance will play an increasingly larger role in capital management.
The report is based on a seminar sponsored by Guy Carpenter to provide insurance company executives with a better understanding of complex capital management issues.
The Managing Capital and Expectations through Effective Risk Management analysis and outlook demonstrates how capital management and reinsurance are tightly related, providing insight into the factors driving the integration of risk management and capital management.
The Guy Carpenter study brings together the insights and analysis of several experts in the areas of capital management and risk management, including:
— A Fundamental Framework for Managing Risk Capital – in which Professor Kenneth A. Froot of Harvard Business School discusses why internal cash flow is a key component of a firm’s ability to invest and thus adds to shareholder value, and how insurance and reinsurance as hedging instruments can stabilize cash flow.
— The View from Outside: A Rating Agency Perspective – where Eric M. Simpson, Senior Vice President, A.M. Best Company, shows how an insurance company’s solvency rating is influenced by its capital management.
— The View from Outside: A Wall Street Analyst Perspective – in which Michael Smith, Insurance Equity Analyst, Bear Stearns, discusses how industry earnings in the future will become more volatile, thus raising the cost of capital.
— Case Studies: An Insurance Company and a Hedge Fund – where Professor Froot and Guy Carpenter executives illustrate the effectiveness of a risk management approach to capital management.
Guy Carpenter & Company Inc. is a leading global reinsurance intermediary and a part of the Marsh & McLennan Companies. Guy Carpenter creates and implements reinsurance and risk management solutions to clients worldwide through more than 2,000 professionals across the globe. The firm’s full breadth of services include Specialty Practices in Special Property, Professional Liability, Life & Annuity, Accident & Health, Environmental, Finite Reinsurance, Worker’s Compensation, Surety & Fidelity, Agriculture and Managing General Agents. In addition, Guy Carpenter’s Instrat unit utilizes tools that optimize the reinsurance decision-making process for the firm’s clients.
Managing Capital and Expectations through Effective Risk Management: A Roadmap for Insurance Industry Executives can also be downloaded from the Guy Carpenter website at www.guycarp.com.
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