Dear friend,
I've just returned from the annual Monte Carlo Rendez Vous and one thing was immediately obvious: just how diverse the participants were.
When the Rendez Vous started in 1957 it was a nice little gathering of reinsurers and cedants to discuss how the market was faring and test the pricing waters for the coming renewals.
Now there are reinsurers and insurers aplenty, sure. But add to the mix brokers, investors, bankers, consultants, lawyers, risk modellers, and even the regulators (!!) and you get an idea of what the modern Monte cocktail looks like.
Takeaways aplenty from an InsuranceERM perspective amidst all this, so I'll concentrate on one for now- the possible constraining effect of Solvency II on corporate activity over the coming year.
Some commentators have focused on the abundant levels of capacity in the current insurance and reinsurance markets (at least on the P&C side of the fence) as a spur to some nifty takeovers over the coming year as companies have more leeway to look for deals with such healthy balance sheets.
Others are not so sure, and for the moment I'm tempted to agree with them. So the argument goes, now more than ever insurers have less flexibility in their balance sheets as they wait to see whether they will obtain model approval, or even a capital load.
In this regulatory environment, there is a degree of dampening as to what boards can do. And even the most laissez-faire insurers must by now be feeling the pressure of Solvency II implementation and the consequences of falling foul of the regulators.
For the coming year, even the most obtuse board will finally have to focus very clearly indeed on enterprise risk management, and the transactions will have to wait.
Marcus Alcock
Editor, InsuranceERM