The strategic agenda of the CFO

On an annual basis, the Geneva Association, the think tank of the CEOs of the world’s largest insurance and reinsurance companies, conducts an International Insurance and Finance Conference in London. The most recent seminar brought together more than 100 selected finance executives from the international insurance sector as well as executives from the wider financial community and government with a close interest in insurance. Among others, prominent Chief Financial Officers (e.g. Denis Duverne, AXA, and Dieter Wemmer, Zurich Financial Services), Chief Risk Officers (e.g. Gideon Pell, New York Life, and Tom Wilson, ING) and Chief Investment Officers (e.g. Martin Senn, Zurich Financial Services) delivered presentations on topical issues of strategic relevance.

The conference report was published in the most recent edition of The Geneva Association’s Insurance and Finance Newsletter and written by Kai-Uwe Schanz, Special Advisor to The Geneva Association and Principal Partner of Dr. Schanz, Alms & Company. It can be accessed here.

The main observations and conclusions from the conference:

(1) The seminar systematically addressed current finance issues on the insurance industry’s strategic agenda: the securitization of insurance liabilities, the dynamic development of the regulatory and financial reporting landscape and the evolving economics of asset liability management.

(2) The growth of insurance-linked securities is expected to continue – notwithstanding the current liquidity and credit crisis. Pressure on regulatory capital, rising catastrophe exposures and investor expectations will continue to act as powerful drivers.

(3) Solvency 2 and International Financial Reporting Standards (IFRS) offer the unique opportunity of establishing a consistent framework which is based on an economic view and addresses the current “cacophony” caused by different standards of internal, regulatory and rating agency capital.

(4) Asset management is a key contributor to the insurance industry’s profitability. Driven by cost pressure and risk considerations outsourced insurance assets are experiencing strong growth. The dynamic and increasingly complex relationship between insurance liabilities and assets, however, may slow this trend and favour in-house solutions.