Short and Long-term Insurers have proprietary capital that tends to be available for the long term. The challenge is how to invest this capital to take advantage of the risk premium available in the long-run, considering the short-term needs of profit stability and capital resilience. By considering how much additional capital is required to optimise returns, rather than optimising under existing constraints, one can realise the full potential of this opportunity. To execute on this, a framework is required to translate from business needs to the available asset strategies.
When IFRS17 comes into effect for life insurers, there will be a material change in the liability valuation standards, and hence on the balance sheet. We take a look at how this can impact the value of a life insurance company, and how to manage these impacts.
