Insurers find innovative ways to navigate through market uncertainty

Insurers have increased their adoption of structured solutions in line with the capital requirement for equity investments following the implementation of Solvency II. Frederic Morlaye, Insurance and Capital Management Solutions, Global Markets at BNP Paribas, is featured in Risk.net  discussing new investment opportunities in asset classes – that are usually greater in terms of capital requirements – as more innovative strategies can balance cost with risk mitigation and ensure full compliance under Solvency II.

Solvency II is a framework with many moving parts; insurers must find the optimal strategy to deal with these conflicting elements, and there are a number of options. Insurers have a pot of capital to allocate to underwriting and asset allocation, and they must find a balance under Solvency II to get the best returns while still being able to live with volatility. This volatility can be tackled by investing in lower-risk strategies or by hedging.