Moody's wins this category for its Scenario Generation Solutions suite that takes advantage of the firm's three strengths: insights from its economics team; stochastic market-consistent, real-world and climate pathway scenario generation capabilities; and easy-to-use automation systems that allow insurers to implement transparent, repeatable and auditable processes.

Clients typically use the solution to help comply with ALM, regulatory stress tests and inform the own risk and solvency assessment. The solution can also help with economic-narrative based stresses, climate change stresses and any other bespoke requirement.

The real-world calibration tools let customers customise the path of market-risk variables to replicate desired stress levels. Various stressed paths can be incorporated into the real-world stochastic projection over short, medium and long-term horizons.

Stress and scenario testing has become a vital exercise for insurers, not just to understand economic and financial market risks, but increasingly for climate change risk.

Moody's has supported this trend by offering a range of Climate Pathway Calibration services and a stress-testing framework to support the use of climate change scenarios and related assumptions in real-world projections. This covers both deterministic and stochastic modelling options. Clients can use a range of economic inputs and climate assumptions to produce scenario set content covering the full range of risk factors and outputs that are required to support their existing ALM or stress-testing process.

A spokesperson for Moody's highlighted the near-term challenges for the sector: "Insurers have an increased need in both the scale and breadth of stress testing processes for internal exercises and regulatory submissions. Key areas include capturing new emerging risks, such as understanding the short-term impact of climate related risk, and the ability to understand the risks on growing exposures to alternative asset classes, such as private credit."