Capital management a balancing act for insurers.(Brief Article)

Business Insurance, January, 2001 by SOUTER, GAVIN

Insurance executives need to adopt new approaches to capital management to meet the conflicting requirements of rating agencies, regulators and investors, two leading industry executives say. While rating agencies and regulators want to see strong capitalization, investors are more concerned about strong returns on equity, and it is difficult for insurers to achieve both goals.

Meeting regulatory capital requirements often results in overcapitalization in many insurers' view. To attempt to meet the expectations of all sides, insurers must adopt a different approach to managing their capital and investments, the two executives said. But one rating agency executive maintains that the perceived overcapitalization of the insurance industry is not as dramatic as...

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