In an analysis published on the website of New England Asset Management Ltd (NEAM) in December 2019, he says 'we believe there are few true caveats to the findings'.
Property and Casualty insurers’ operating environment is rapidly changing, which is affecting many different facets of their business. Telematics, cyber risk, climate change, tort capitulation, and other factors, are altering policy conditions; alternative capital sources and InsurTech are challenging entity structures and processes; rating agencies’ focus on enterprise risk management (ERM) is impacting solvency capital standards; and, regulators’ pursuit of evolving global social norms, such as environmental, social and governance (ESG) requirements, are impacting insurance and investment activities. In this landscape, low bond yields and volatile equity markets remain.
Against this background, executive management must decide risk preferences and tolerances, capital levels and structure, product mix (customer base, coverages and geography), asset allocation, and risk mitigation strategies, such as reinsurance and asset hedges. These critical decisions are often made in organizational silos without considering their interdependencies possibly resulting in sub-optimal outcomes. A simple and uncluttered “Enterprise” approach provides a uniform framework and common language to enhance the decision-making process.
"We find asset reallocation combined with reinsurance to be the most effective means to manage an insurer’s return/risk profile following a more holistic enterprise-based framework", the article says.
New England Asset Management (NEAM) was established 1984 based on the recognition of a need for specialised asset management services tailored to the insurance industry. It was acquired by Berkshire Hathaway in 1998 and established NEAM Limited in Ireland with a branch office in the UK, 'to support the requirements of our global clients and position ourselves for future success in the European marketplace'.