The document provides an overview and update on the development of the Insurance Capital Standard (ICS) by the International Association of Insurance Supervisors (IAIS). The ICS aims to establish a global consolidated risk-based capital standard for internationally active insurance groups. It is still under development with field testing ongoing. The ICS uses a 99.5% Value at Risk over a 1-year time horizon to calculate the Prescribed Capital Requirement, and allows for a tiered approach to capital resources. It evaluates risks such as insurance, market, credit and operational risk using factors and stress-based modeling.
Liquidity Risk is normally a crucial issue in a banking crisis, however, during the 2007-2010 period, Liquidity has not been as difficult for us as we may have thought. There are many reasons for this, but number one is the fact that today’s community bankers simply have a better understanding of the various techniques for raising both retail deposits and wholesale funds. What does make this crisis a bit different is the relative pricing efficiencies in the wholesale or non-core funding arena these days and our session will focus on how bankers can avoid those difficult examiner discussions about the use of FHLB Advances and Brokered Deposits. It’s all about process and we will provide guidance on what needs to be in your ALCO Policy as it relates to wholesale funding. We will also explore the April 2010 Liquidity and Funds Management Guidance to ensure your bank is up to speed on those requirements. Finally, we will provide specific guidance on both Ratio Analysis and creating your Contingency Funding Plan and will review a sample CFP.
Assessing a bank’s culture is not an easy task, but there clearly is an increased emphasis on culture that is part of the regulators' broader focus on “heightened standards.” Learn what it takes to have a strong credit culture. Read about these 10 credit culture factors to assess your institution's credit culture.
Liquidity Risk is normally a crucial issue in a banking crisis, however, during the 2007-2010 period, Liquidity has not been as difficult for us as we may have thought. There are many reasons for this, but number one is the fact that today’s community bankers simply have a better understanding of the various techniques for raising both retail deposits and wholesale funds. What does make this crisis a bit different is the relative pricing efficiencies in the wholesale or non-core funding arena these days and our session will focus on how bankers can avoid those difficult examiner discussions about the use of FHLB Advances and Brokered Deposits. It’s all about process and we will provide guidance on what needs to be in your ALCO Policy as it relates to wholesale funding. We will also explore the April 2010 Liquidity and Funds Management Guidance to ensure your bank is up to speed on those requirements. Finally, we will provide specific guidance on both Ratio Analysis and creating your Contingency Funding Plan and will review a sample CFP.
Assessing a bank’s culture is not an easy task, but there clearly is an increased emphasis on culture that is part of the regulators' broader focus on “heightened standards.” Learn what it takes to have a strong credit culture. Read about these 10 credit culture factors to assess your institution's credit culture.
Evaluation of Capital Needs in Insurancekylemrotek
Presentation on capital adequacy analysis for property casualty insurance companies, as presented to Milliman\'s 2008 Casualty Consultants Forum in Denver
“Basel III is more about improving the risk management systems in the Banks than just Improved Quality and enhanced Quantity of capital”. Please discuss the challenges to the Indian Banks by March,2017
Introduction to Operational Risk Management for Bank Junior Officers in Indiamlvenkat
This is an introductory, self-explanatory presentation on Operational Risk Management for Junior officers in Banks in India, illustrated with lots of interesting images to make the concepts easy to understand. Follow the link at the end of the slides to read interesting Op Risk stories compiled from day to day banking, which can be used for group exercise or better personal understanding. (Answers are not given! You have to generate them yourselves or from team members ! ).
(The story on Corporate Banking may appear similar to the recent Banking scam -Feb 2018- in India, but then, similar frauds have been repeatedly happening in one Bank or the other in the last 30 years in India. Neither Commercial Banks in India nor Reserve Bank of India have learnt the operational risk lessons).
You are free to use the slides and my stories for your work.
You can customise the stories to suit your banking environment and/or to add your own Bank stories to build up a library of Op Risk events.
I acknowledge and thank Internet and all original creators for providing cartoons, illustrations, photos, jokes and information which I have liberally used in the PPT.
Alternative risk transfer is the use of techniques other than traditional (re)insurance that provide risk-bearing entities with protection from risks of loss. This presentation will briefly describe the insurance-linked securities (“ILS”) universe, followed by an overview of the impacts on (re)insurance business model transformation (which we shall refer to generically as (re)insurance and capital market convergence). The presentation will finally show the current and prospective involvement of actuaries in the (re)insurance and capital market convergence.
Evaluation of Capital Needs in Insurancekylemrotek
Presentation on capital adequacy analysis for property casualty insurance companies, as presented to Milliman\'s 2008 Casualty Consultants Forum in Denver
“Basel III is more about improving the risk management systems in the Banks than just Improved Quality and enhanced Quantity of capital”. Please discuss the challenges to the Indian Banks by March,2017
Introduction to Operational Risk Management for Bank Junior Officers in Indiamlvenkat
This is an introductory, self-explanatory presentation on Operational Risk Management for Junior officers in Banks in India, illustrated with lots of interesting images to make the concepts easy to understand. Follow the link at the end of the slides to read interesting Op Risk stories compiled from day to day banking, which can be used for group exercise or better personal understanding. (Answers are not given! You have to generate them yourselves or from team members ! ).
(The story on Corporate Banking may appear similar to the recent Banking scam -Feb 2018- in India, but then, similar frauds have been repeatedly happening in one Bank or the other in the last 30 years in India. Neither Commercial Banks in India nor Reserve Bank of India have learnt the operational risk lessons).
You are free to use the slides and my stories for your work.
You can customise the stories to suit your banking environment and/or to add your own Bank stories to build up a library of Op Risk events.
I acknowledge and thank Internet and all original creators for providing cartoons, illustrations, photos, jokes and information which I have liberally used in the PPT.
Alternative risk transfer is the use of techniques other than traditional (re)insurance that provide risk-bearing entities with protection from risks of loss. This presentation will briefly describe the insurance-linked securities (“ILS”) universe, followed by an overview of the impacts on (re)insurance business model transformation (which we shall refer to generically as (re)insurance and capital market convergence). The presentation will finally show the current and prospective involvement of actuaries in the (re)insurance and capital market convergence.
Our staff is fully trained in all aspect of school cleaning and we are ranked highly in the list of cleaning contractor in Sydney by our clients. We train our staff to maintain the security level of the things because security is our first priority.
Security everywhere digital signature and digital fingerprint v1 (personal)Paul Yang
This is the slide I used to train people about the security concepts, such as digital signature and digital fingerprint.
I tried to use friendly way to explain the topic with animation and many example in real life.
Hope it helps for you.
En la presente se muestra una clase modelo realizada para un concurso de docente de Instituto Superior, esta referida al curso de Sistemas Electrónicos Digitales, tema de Conversión de números de decimal a binario, además se usa una practica con equipos como el protoboard, leds, etc.
RISK-ACADEMY’s guide on risk appetite in non-financial companies. Free downloadAlexei Sidorenko, CRMP
Risk appetite refers to an individual or organization’s willingness to take on risks in pursuit of potential returns. It is an important consideration for businesses, as it can determine the types of investments and strategic decisions they make. A high risk appetite may lead to a focus on high-growth, speculative investments, while a low risk appetite may result in a preference for more conservative, steady returns. It is important for businesses to carefully assess and manage their risk appetite in order to make informed decisions and achieve their financial goals.
But before beginning the conversation about risk appetite, it is important to remember that most non financial organizations have already documented their appetites for different common decisions or business activities. Segregation of duties, financing and deal limits, vendor selection criteria, credit limits, treasury limits on banks, investment criteria, zero tolerance to fraud or safety risks – are all examples of how organizations set risk appetite.
What is risk appetite:
10% of the time risk appetite is imposed by laws and regulations, not set – Often risk appetite is imposed by government, regulators, markets, not set by management. Examples include zero-tolerances or limits on safety, bribery and corruption, AML, pollution, sanctions, privacy.
10% of the time risk appetite is the gentlemen’s agreement between Board and management – Boards have an important oversight role and help them set the direction and boundaries for management decision making. Those management decision making boundaries is risk appetite. Examples include deal approvals only by Board above a certain limit, limits on holding percentage of cash in certain pre-approved banks, market risk limits, credit risk limits, insurance thresholds, rules on credit limits for certain types of customers, limits on investments in different countries, etc.
80% of the time risk appetite is the risk reward trade-off for a specific decision – The key is making uncertainty around decisions presented to the Board transparent to allow decision makers choose the alternative which offers the most appropriate risk reward balance according to their individual appetites.
Download the full guide to read about documenting risk appetite, reviewing risk appetite, case studies and examples and addition video resources: Guide to risk appetite 2023
La gestion actif-passif (ALM), également connue sous le nom de gestion des actifs et des passifs, est une pratique essentielle dans le secteur des compagnies d'assurance. Elle vise à équilibrer les actifs et les passifs d'une compagnie d'assurance afin de garantir sa solvabilité et sa rentabilité à long terme. Cette stratégie consiste à gérer de manière proactive les actifs et les passifs de l'entreprise pour minimiser les risques liés aux écarts de durée, de taux d'intérêt et d'autres facteurs qui pourraient affecter sa situation financière.
Dans le contexte de l'assurance, les passifs représentent les engagements futurs de l'entreprise envers ses assurés, tels que les paiements de prestations, les sinistres et les obligations contractuelles. Les actifs, quant à eux, sont les investissements détenus par la compagnie d'assurance pour répondre à ces engagements. L'objectif principal de l'ALM est d'assurer que les actifs de la compagnie d'assurance sont suffisants pour couvrir ses passifs à tout moment, tout en optimisant le rendement de ces actifs.
La gestion actif-passif implique une analyse approfondie des caractéristiques des passifs de l'entreprise, telles que leur montant, leur échéance et leur sensibilité aux fluctuations des taux d'intérêt, ainsi que des caractéristiques des actifs détenus, comme leur liquidité, leur rendement et leur risque. Sur cette base, des stratégies d'investissement sont élaborées pour aligner au mieux les actifs avec les passifs, tout en tenant compte des objectifs de rendement et de risque de l'entreprise.
Les compagnies d'assurance utilisent une gamme d'outils et de techniques pour mettre en œuvre leur stratégie ALM, notamment l'allocation d'actifs, le rééquilibrage de portefeuille, la gestion des risques et l'utilisation de produits dérivés financiers pour couvrir les risques. Elles peuvent également recourir à des modèles mathématiques sophistiqués pour évaluer et gérer les risques financiers.
En résumé, la gestion actif-passif est cruciale pour assurer la solidité financière et la viabilité à long terme des compagnies d'assurance en équilibrant leurs actifs et leurs passifs de manière à minimiser les risques et à maximiser les rendements. C'est une discipline complexe qui nécessite une expertise financière approfondie et une surveillance continue des conditions du marché et des engagements de l'entreprise.
Suitability is the process by which wealth managers establish whether the investment proposition they put forward is right for clients. The FCA has put suitability at the top of its agenda to ensure that clients get what they expect and wealth managers are better placed to manage these expectations.
The presentation reviews the recent Jamaican context as a backdrop for the evolution of capital adequacy standards by the Bank of Jamaica, the regulator of deposit taking institutions (DTI) and financial holding companies of financial conglomerates which contain a DTI.
Mercer Capital | Valuation Insight | Capital Structure in 30 MinutesMercer Capital
Capital structure decisions have long-term consequences for shareholders. Directors evaluate capital structure with an eye toward identifying the financing mix that minimizes the weighted average cost of capital. This decision is complicated by the iterative nature of capital costs: the financing mix influences the cost of the different financing sources. While the nominal cost of debt is always less than the nominal cost of equity, the relevant consideration for directors is the marginal cost of debt and equity, which measures the impact of a given financing decision on the overall cost of capital. The purpose of this whitepaper is to equip directors and shareholders to contribute to capital structure decisions that promote the financial health and sustainability of the company.
1. Differences and
Commonalities in
Global Capital
Requirements
Michael Solomon, FCAS, MAAA, CERA (Moderator)
Ned Tyrrell, FCAS, MAAA
Alan Morris , ACAS, MAAA, ASA
Don Treanor, ACAS
2. Antitrust Notice
• The Casualty Actuarial Society is committed to adhering strictly to
the letter and spirit of the antitrust laws. Seminars conducted under
the auspices of the CAS are designed solely to provide a forum for
the expression of various points of view on topics described in the
programs or agendas for such meetings.
• Under no circumstances shall CAS seminars be used as a means for
competing companies or firms to reach any understanding –
expressed or implied – that restricts competition or in any way
impairs the ability of members to exercise independent business
judgment regarding matters affecting competition.
• It is the responsibility of all seminar participants to be aware of
antitrust regulations, to prevent any written or verbal discussions
that appear to violate these laws, and to adhere in every respect to
the CAS antitrust compliance policy.
4. Intro
• Very active time, at US and international level, in Group
Capital:
– NAIC developing group capital “calculation” based
on an aggregation approach
– Federal Reserve developing consolidated group
level capital requirements –
• Systemically Important Financial Institutions (SIFI’s)
• Thrift Holding Companies
– International Association of Insurance Supervisors
(IAIS) developing a set of capital standards for
Globally Systemically Important Insurers (G-SII’s)
and Internationally Active Insurance Groups (IAIG’s)
• Focus of these slides will be on the Insurance Capital
Standard (ICS) being developed at IAIS for IAIGs.
– Will focus on issues we have highlighted for this panel
5. Some Caveats
• The ICS is still a work in progress – some/all
subject to change.
• I’m discussing a standard being developed by
International Association of Insurance Supervisors
(IAIS). How - and if- to implement this standard is
up to individual jurisdictions.
• What follows is my attempt to describe ICS. I will
provide different viewpoints on its design. Not all
of these viewpoints are shared by state regulators
(or, for that matter, me).
6. What is the ICS?
• ICS = Risk-based Global Insurance Capital Standard
• Consolidated quantitative capital standard
– Includes non-insurance operations of the group
– To extent risks are not quantified in ICS they are to be
addressed in ComFrame
• Establishes minimum standard
– Supervisors may set higher standards
– Not intended to replace or affect capital standards for
underlying legal entities
• Applies to “Internationally Active Insurance Groups”
(IAIG’s)
– Write premium in at least 3 jurisdictions
– Home jurisdiction account for less than 90% of total GWP
– Assets of >$50B OR GWP >$10B (USD)
8. ICS Objectives
• Main objectives are protection of policyholders and
to contribute to financial stability.
• Ultimate goal is “comparability of outcomes”
across jurisdictions.
– Required capital and definition of capital resources are
based on characteristics of risks held by IAIG irrespective
of location of its headquarters.
– Avoiding “regulatory arbitrage”
– “Comparability” doesn’t necessarily mean exact same
numerator/denominator of capital ratio
• Strike an appropriate balance between risk
sensitivity and simplicity.
9. 2016
Launch of 2016 Field Testing
Release of 2nd ICS Cons Document
2017
Adoption of ICS “Version 1.0” for
confidential reporting
2018 Publication of ICS Version 2.0
2019
Adoption of ComFrame including
ICS Version 2.0
Highlights from ICS
Timeline
11. ICS Valuation
• Two valuation approaches being tested for ICS:
– GAAP w/ Adjustments (GAAP+)
– Market-Adjusted Valuation (MAV)
• Valuation will be “going concern”
– That is, “assumes the company will continue to operate
and that future business will be written”
• Generally speaking, assets are marked-to-market
• Insurance liabilities defined as “current estimates”
plus a “margin over current estimate”
– Current Estimate: The expected present value of all
relevant future cash flows that arise in fulfilling insurance
obligations using unbiased, current assumptions
12. Current Estimates
(Breakdown)
• For claims, this includes not
just payments to
policyholders but all
relevant expenses
and(allocated, unalloc, etc.).
• There is ambiguity here
around the treatment of
general expenses.
• Which insurance obligations
to include? Issues of
Recognition criteria and
contract boundaries.
• Big issue in life where
assumptions are often
“locked in” and “margins for
conservatism” are common.
• Less so for P&C, though
there are implicit margins in
undiscounted reserves and
unearned premiums.
• That does not (necessarily)
mean you need to be able
to describe full distribution.
(i.e. no need for stochastic
reserving).
• Under MAV, CE is
discounted using prescribed
yield curves provided by
IAIS.
Expected
Present Value
Unbiased
Current
Assumptions
Relevant
Future
Cashflows
Fulfilling
Insurance
Obligations
13. ICS Capital Resources
• ICS Capital Resources will be “tiered”.
– Tier 1 will feature qualifying financial instruments, and
capital elements other than financial instruments, that
absorb losses on a ‘going concern basis’ and in ‘winding
up’.
– Tier 2 financial instruments and capital elements will only
absorb losses in winding up.
• Criteria for tiering capital include subordination,
availability, permanence, loss absorbing capacity,
absence of emcumbrances and/or mandatory
servicing costs.
14. ICS Capital Requirements
• Key aspects of quantifying a capital requirement
(as proposed in ICS Consultation Document):
– PCR vs MCR (Prescribed vs Minimum)
– Risk Measure (e.g. 90% TVaR or 99.5% VaR)
– Time Horizon (e.g. 1 year or runoff to ultimate)
• ICS, in form currently undergoing Field Testing, is
PCR based on 99.5% VaR using a 1 year time
horizon
15. Risks In ICS
Insurance Risk
LIFE/HEALTH*** RISKS
Mortality Longevity
Morb/
Disability
Lapse Expense
NON-LIFE RISKS
Premium
Claim
Reserve
Cat
Market Risk
Equity
Real
Estate
Interest Rate Currency Asset Concentration
Credit Risk Operational Risk
Except to extent (implicitly) included above, following are excluded:
Group Liquidity Reputational Strategic
Aggregation of requirements will reflect diversification
***Possibility that Life/Health risks will be split
16. PCR vs MCR
• Prescribed Capital Requirement (PCR) – The level of
solvency above which a supervisor does not intervene
on capital adequacy grounds.
– Defined such that assets will exceed technical provisions
and other liabilities with a specified level of safety over a
defined time horizon
– PCR generally means focus is on insurer as “going concern”
• Minimum Capital Requirement (MCR) – a solvency
control level at which, if breached, the supervisor would
invoke its strongest actions, in the absence of
appropriate corrective action by the insurance legal
entity.
– Subject to minimum bound below which no insurer is
regarded to be viable to operate effectively
• PCR leads to more (but less disruptive) supervisory
action than MCR
17. ICS Risk Measurement
• ICS will involve a combination of risk measurement
approaches, particularly:
– Factor Based Approach-- Factors applied to exposure
measure (approach in most of RBC)
– Stress Based Approach-- Capital requirement is
determined as the decrease between capital resources on
unstressed balance sheet and those on stressed balance
sheet
– Modeling will be used for catastrophe losses
• There is a large effort underway to “calibrate” the non-life
factors
– Experience data similar to that found in Schedule P collected from
supervisors and volunteer companies
18. What is a One Year Time
Horizon?
• One Year 99.5% VaR in plain(ish) English –
– If IAIG’s capital resources today are greater than the required
capital, then there is a < 0.5% probability that capital resources in
one year’s time will be negative.
• Shock Period-- The period over which a shock is applied to
a risk.
• Effect Horizon-- The period over which the shock that is
applied to a risk will impact the insurer.
• A one year time horizon does not mean that cash-flows
beyond one year are ignored…
• …however there is a disconnect between the short horizon
of capital requirement and the longer term nature of
policyholder liabilities
– Relationship to Margin Over Current Estimate
19. Goals of Capital Standards
• Policyholder Protection
• Financial Stability
• Pragmatic
• Flexible (?)
25. Stochastic Reserving
Strawman Definition of “Stochastic Reserving” (SR):
The use of “stochastic models” to estimate a
probability distribution for insurance liabilities by
allowing for random variation in one or more inputs
over time.
• “Allowing for random variation” refers to inputs being
random variables. Simulation is often used but
simulation is neither necessary, nor sufficient, for SR.
• SR is common for certain life insurance products
where stochastic inputs (e.g. interest rates, mortality
rates) can be more easily identified.
• Stochastic methods produce not just expected value
of reserves but a distribution.
• SR is one way (but not only way) to produce an
expected value of reserves.