1. Alternative RiskFinance Solutions
Besides traditional reinsurance a growing number of alternative RiskFinance solutions emerge, allowing the cedent to further improve the combined ratio on a portfolio basis. They include ways of portfolio transfer like financial reinsurance and insurance securitisation. This could evolve from the development of the underlying payment patterns (“Embedded Value”), extreme mortality, longevity or natural catastrophes. Risk-takers are capital market investors using insolvency remote special purpose vehicles, SPVs.
STAHLMANN RiskFinance Solutions can draw upon a vast experience in the area of insurance securitisation, including risk assessment, structuring, contractual design and placement with institutional investors across Europe. STAHLMANN supported the successful execution of embedded value finance (life) and natural catastrophe risk transfer (non-life). By using broader capacities, the cedents could stabilise their technical results.
2. Interim Management
The increasing number of portfolio run-offs up to discontinuing entire lines could result in a shortage in senior management staffing. In many cases such a run-off will be initiated by financial service providers, primarily banks or hedge funds. The motivation of the acquirer is mainly on optimising the asset management. The insurance technique and ongoing support is often of secondary importance.
Within run-off situations STAHLMANN RiskFinance Solutions offers interim management in the area of finance, underwriting and reinsurance. Over several years STAHLMANN has been appointed as chairman of the audit committee (accounting and controlling functions) as well as human resources of an Irish fully-licensed reinsurer and his Bermudian parent company until the resale of both entities. Recently, STAHLMANN has provided management services to acquisition companies in the life sector.
3. Portfolio Run-Off
The fragmented German insurance market is in a transitional phase. The life insurance sector in particular is adversely impacted by the continuous low-interest-rate environment. High interest rate guarantees have a negative effect on the portfolio and lead to a reduction of new business. It is becoming increasingly difficult to produce stable earnings. In the light of the above, it is concluded that many insurance companies need to reorganise. The market is seeing consolidation; more and more portfolios undergo run-off.
STAHLMANN RiskFinance Solutions provides assistance in the search for new owners and the actual portfolio run-off. As part of a consulting assignment a unit-linked life insurance policies portfolio has been transferred to a single purpose entity, SPE. The solvency capital required has been raised from institutional investors. By playing an active role in managing the company's operations, notably the setup of a revised asset allocation, the lapse rate could be stabilised in a sustained manner. This approach is producing win-win-outcomes for both, the new owner and the policyholders.