Despite the industry’s performance throughout the recent financial crisis Ludger Arnoldussen, member of Munich Re's Board of Management responsible for reinsurance business in Germany, Asia Pacific and Africa, said underwriters will continue to face demands over their financial strength.
 

"Insurers have mastered the financial crisis comparatively well so far,” he added. “They now need to regain their former capital strength and secure it long term in order to meet the higher standards required by Solvency II. Munich Re will offer clients its full support in this connection. We create individual solutions for risk transfer that are specifically designed to provide the required capital relief for our clients".
 

With many insurers experiencing a drastic slump in their equity capital in 2008, they are now looking to recover the ground they lost but are doing so at a time when they need to gear up for the new regulatory framework under Solvency II, which is scheduled to be introduced in Europe from 2012.

 

“With the advent of Solvency II, insurers have to prepare themselves for a consistently economic evaluation of all risks,” said the reinsurer. “Besides greater emphasis on sound risk management, it is expected that small or specialist insurers in particular will face a need for more risk capital. With Solvency II, more precise monitoring and controlling of risks will become standard practice.

“Uniform rules applying to the insurance industry in Europe will also serve as a model for countries outside Europe, for example in Asia. The industry as a whole will be more crisis-resistant and internationally competitive as a result.”

Munich Re said it also believed that reinsurance would assume greater attraction with the advent of Solvency II.

 

“On the one hand, the capital-relief effect of reinsurance will be taken into account in the risk-based models from 2012 and reinsurance cessions will no longer be limited to certain volumes. On the other hand, the need for tailored advice and consultancy will increase with Solvency II,” it added.