ERM for Insurance Companies: Adding the Investors' Point of View

Paper to be presented by Andrew Hitchcox, Paul Klumpes, Kenneth McGaughey, Andrew Smith and Neil Taverner.

ERM activities in insurance companies have been successful in bringing together all of the key risks in the company, to be managed in a holistic fashion. The authors of this paper believe that an ERM framework also needs to look beyond the company, and have regard to the risk management needs of investors, from the point of view of the contribution of the insurance company to the overall risk and reward of their total investment portfolios. To meet these needs, the ERM framework needs to provide sufficient information on topics such as systematic risk, potential correlations of earnings from future new business with macroeconomic trends, other risks to franchise value, and sources of model risk within the company. The paper does not provide solutions for the issues described above; but limits itself to describing and discussing the direction for the next generation of ERM activities.

More information is on the Actuarial Profession (UK) website.