I received an email with a request that left me genuinely confused. Not because the topic was complex, but because I couldn’t figure out what the person was asking for. Buried somewhere in elaborate sentences and terminology was a request ahead of a regulatory inspection, but I still don’t know what was expected of me.…
Solvency and Financial Condition Reports (SFCRs) are a mature feature in Europe under the Solvency II regime, providing extensive public disclosures of insurers’ risk management, capital strength, and governance practices. However, in South Africa and many developing markets, public reporting at this depth is currently not a regulatory requirement. South Africa used to have a…
ORSA reports are meant to be a strategic cornerstone, connecting capital, risk, and business planning. At their best, they give boards clarity on resilience, regulators confidence in oversight, and executives a compass for navigating uncertainty. At their worst, they become slow, disconnected documents that fail to offer real insight or challenge assumptions. This article outlines…
This is a bit off-topic from my usual discussions on insurance, risk, and capital modelling, but financial and economic risk matters deeply. And for insurers, we’ve seen how things can go very wrong. Hyperinflation, Currency Crises & Insurance Industry Collapse Hyperinflation destroyed Zimbabwe’s insurance sector, and decades later, it still hasn’t recovered. Currency crises in…
As a consulting actuary who has spent considerable time analysing population trends, I’ve observed growing consensus among demographers that we’re heading toward a fundamentally different demographic future than what we’ve experienced over the past century. The data is compelling: global population will likely peak sometime this century before beginning a sustained decline – a phenomenon…
Foreseeable dividends remain a grey area in Solvency II and South Africa’s Solvency Assessment and Management (SAM). While the concept seems straightforward—capital that is likely to be distributed as dividends should not count towards regulatory solvency—its practical application is anything but clear. Regulatory Ambiguity: When Is a Dividend Foreseeable? The official guidance under Solvency II…
In the insurance industry, we often use Solvency Capital Requirement (SCR) cover ratios as a key metric for comparing insurers’ financial strength. While these ratios provide valuable insights, their interpretation requires careful consideration of numerous factors that can make direct comparisons misleading. This article explores why seemingly straightforward comparisons of SCR cover ratios can mask…
It is essential to consider critical viewpoints that challenge conventional wisdom—especially when it comes to Value-at-Risk (VaR). In a thought-provoking dialogue, Nassim Taleb critiques VaR and highlights the dangers of portfolio insurance and dynamic hedging strategies. Here are key arguments from his 1997 forceful response to Philippe Jorion’s support for VaR. Misplaced Precision and Concrete…
