Solvency II – Twenty Third Floor

Actuarial and Risk, emerging risk, insurance, life insurance, managing uncertainty, microinsurance, regulatory risk, Solvency Assessment and Management, Solvency II

Stressed to Kill: Greatest Hits of ORSA Modelling Fails

9 May 2025

David Kirk

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…
Read more: Stressed to Kill: Greatest Hits of ORSA Modelling Fails
Actuarial and Risk, banking, Basel III, capital, capital structure, costofcapital, life insurance, managing uncertainty, Solvency Assessment and Management, Solvency II

The Loss-Absorbing Capacity of Distant Dividends That Can Still Be ‘Foreseen’

24 February 2025

David Kirk

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…
Read more: The Loss-Absorbing Capacity of Distant Dividends That Can Still Be ‘Foreseen’
Actuarial and Risk, alternative investments, capital, capital structure, climate change, insurance, managing uncertainty, measurement, microinsurance, modelling, Solvency Assessment and Management, Solvency II, statistics

Capital Modelling for parametric insurance – intro

21 October 2024

David Kirk

As parametric insurance gains traction, insurers face specific challenges in capital modeling and regulatory capital navigation. I have a longer paper coming out on this, but if you’re looking for an intro, here are some of the interesting and different aspects compared to more traditional insurance. 1. Regulatory Uncertainty: The treatment of parametric insurance under…
Read more: Capital Modelling for parametric insurance – intro
Actuarial and Risk, capital, insurance, investments, life insurance, market risk, measurement, Solvency Assessment and Management, Solvency II

The Equity Symmetric Adjustment: Dispelling Myths and Understanding Market Dynamics

25 September 2024

David Kirk

Introduction In the world of insurance regulation, few mechanisms are as misunderstood as the equity symmetric adjustment (ESA), also known as the equity dampener. This feature, present in both the Solvency II framework in Europe and the Solvency Assessment and Management (SAM) regime in South Africa, is often incorrectly associated with the concept of mean…
Read more: The Equity Symmetric Adjustment: Dispelling Myths and Understanding Market Dynamics
Actuarial and Risk, capital, credit risk, financial risk, insurance, life insurance, market risk, measurement, regulatory risk, Solvency Assessment and Management, Solvency II

Reinsurer credit rating and CQS – sovereign caps and misapplication of regulations

9 September 2024

David Kirk

Does the “sovereign cap” apply to credit ratings for insurer solvency reporting? This came up in a discussion about treatment of reinsurance and choice of Credit Quality Step (CQS) under South African regulations. Usually a local currency, international scale credit rating from a credit rating agency is the most direct way to establish a reliable…
Read more: Reinsurer credit rating and CQS – sovereign caps and misapplication of regulations
Actuarial and Risk, alternative investments, capital, climate change, Emerging Markets, emerging risk, hedging, insurance, investments, microinsurance, Solvency Assessment and Management, Solvency II

Parametric insurance getting ready for prime time

26 August 2024

David Kirk

Parametric insurance has been growing as a tool to manage risk transfer. This may become even more important as risks become more difficult to insure, and the basis risk becomes more palatable. Parametric insurance is showing signs of being ready for prime-time. Greater demand due to climate change, and greater supply as more entities and…
Read more: Parametric insurance getting ready for prime time
Actuarial and Risk, Featured, financial risk, insight, insurance, managing uncertainty, operational risk, Solvency Assessment and Management, Solvency II

A piece of the failure puzzle – decreasing insurer failure rates through Skilled Person Reviews

29 May 2024

David Kirk

Every failure hits policyholders’ savings or cover, impact their lives and their livelihoods. They destroys shareholder value and decrease confidence in the entire financial sector. Suggestion – Introduce the equivalent of the UK’s Skilled Person Review We must find ways to intervene with struggling insurers well before it’s time for a statutory manager or curator.…
Read more: A piece of the failure puzzle – decreasing insurer failure rates through Skilled Person Reviews
Actuarial and Risk, complexity, Featured, financial risk, insurance, InsurTech, life insurance, managing uncertainty, microinsurance, Solvency Assessment and Management, Solvency II, systemic risk

How and why insurers fail

27 May 2024

David Kirk

I’ve been updating my presentation from 2021 on “How and Why Insurers Fail”. I now estimate the annual failure rate (or at least getting into serious financial difficulty) for an insurer in South Africa at 0.4% using an approximation over 2009 to 2024. With a hefty additional dose of approximations, I get about the same…
Read more: How and why insurers fail

Twenty Third Floor

Figuring out the future and the now

Category: Solvency II

Stressed to Kill: Greatest Hits of ORSA Modelling Fails

The Loss-Absorbing Capacity of Distant Dividends That Can Still Be ‘Foreseen’

Capital Modelling for parametric insurance – intro

The Equity Symmetric Adjustment: Dispelling Myths and Understanding Market Dynamics

Reinsurer credit rating and CQS – sovereign caps and misapplication of regulations

Parametric insurance getting ready for prime time

A piece of the failure puzzle – decreasing insurer failure rates through Skilled Person Reviews

How and why insurers fail

About David Kirk

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