Mr Panning was speaking as delegates gathered in Walt Disney World Florida for the annual Property Casualty Association of America meeting as the reinsurance broker launched a new service designed to measure risk, manage capital, and maximize franchise value.

Willis Re said that its new Value Based Capital Management (VBCM) services is the reinsurance industry’s first and only practical, commercially available service of its type.

He said: “Willis Re believes that insurers should no longer face the difficult trade off between maximizing earnings and protecting against risk.

“VBCM enables insurers to determine for the first time which particular strategic choices will enable them to maximize their franchise value as a going concern. Today’s announcement is the latest in Willis Re’s long history of providing key strategic tools that enable our clients to thrive.”

“VBCM’s methodology and the answers it provides are both transparent and practical,” added Mr Panning. “At Willis Re, we believe our clients deserve tools that can be indispensable not just to informing strategic decisions, but also to answering the key questions posed by shareholders, rating agencies, analysts, and regulators. In the current market environment, that kind of information is more important than ever.”

The broker added: “Infocusing on franchise value, VBCM rejects the notion, implicit in many analytic tools, that a client’s business should be valued and therefore managed as if it were in runoff. Like traditional Enterprise Risk Management (ERM), VBCM begins with a comprehensive assessment of an insurer’s overall risk from multiple sources, including underwriting, adverse loss reserve development, stock market volatility, bond defaults, and reinsurer default risk.”

However claimed Willis VBCM goes well beyond typical ERM analysis.

“It not only addresses how much and what form of capital a firm should have given its overall risk profile, but also responds to these critical questions by identifying the amount and type of capital that maximizes the insurer’s value as a going concern,” explained Mr Panning.