Your experience with IFRS17 over the past couple of years likely depends on the insurers you’ve been closest to—whether they’re predominantly using PAA, GMM, or VFA approaches. The differences between the General Model (GMM) and the Variable Fee Approach (VFA) can be substantial. VFA does away with the awkwardness of locked-in rates on CSM and…
There are many reasons to doubt the perfect applicability of the 6% cost of capital rate used in South Africa for the solvency Risk Margin calculation. Not least of which is the decrease to the rate in Europe and in the UK. However, if we borrow ideas from Embedded Value (TEV/EEV or MCEV) and look…
The world of group supervision for South African insurers is surprisingly immature for regulations that have been in place for 6 years. [All of this post applies as of May 2024. Regulations may have changed between then and the time you are reading this.] I started this journey investigating Insurer Capital Standards (ICS) as a…
Will IFRS17 kill off Embedded Value (EV) reporting in Africa? Or will it finally bring Market Consistent Embedded Value (MCEV) to life? I gave a presentation at the Life Assurance Seminar 15 years ago on MCEV. It took off in the UK but didn’t become popular in South Africa. That might be changing. Some insurers…
I’ve been brewing a wild idea for a while. Insurance regulations weren’t written with IFRS17 in mind. This causes some head scratching when it comes to premium volume measure for non-life insurance, but common sense gets you to the right answer without much trouble. Those who say otherwise seem to be looking for problems where…
What does Business Rescue mean for credit risk, ratings and cross-default? Business Rescue precludes creditors from applying for liquidation of the business. This is the removal of an existing right of lenders: “a temporary moratorium on the rights of claimants against the company or in respect of property in its possession” From what I gather…
Life expectancy is one of those funny measures with a cavernous gap between those who think they understand it and those who do. The latest controversy arose a few days ago a year ago (this post has been in draft for a long time…) because Russia is planning to increase the normal retirement age from…
Reading the Financial Soundness Standards for Insurers (FSIs) is an exercise that can only end in madness. I’m sufficiently familiar with them now that I mostly refer back to them for particularly tricky or thorny issues. Without fail, the words fail to clearly communicate exactly what was intended. Take ancillary capital as an example. To…
