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CEO Forum: Seven steps to enlightenment
30 April 2010
Peter Zaffino, CEO of Guy Carpenter & Co, reflects on the lessons learned from the financial crisis and points to the way ahead.
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Peter Zaffino
Guy Carpenter & Co
A closer look at the recent financial crisis and what impact it had on the global economy reveals that nearly all reinsurers experienced capital stress. Their balance sheets suffered far greater damage due to asset volatility than they did from underwriting losses. Asset impairment trends unfolded in 2008, as evidenced by the level of shareholders’ funds tracked in the Guy Carpenter Reinsurance Composite, which declined by 18% during 2008. This slump in capital levels was met by downgrades in financial strength ratings from the commercial ratings agencies, significantly altering the reinsurance industry’s credit profile. The implications for insurance buyers were sizeable, since many had required “AA” ratings of their reinsurers for certain classes of business.
With reinsurer asset levels almost completely recovered in 2009, the potential challenges of the financial crisis appear to be receding. This is an opportune time to consider the lessons learned...
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