Do not wait to reinforce your balance sheet – a storm is on the horizon.
Even the America’s Cup yachts must go into dry dock to make sure their hulls are in optimum condition for the races to come. In a similar respect, an insurer’s balance sheet needs to be race ready as we emerge in the coming months out of lockdown into what essentially are uncharted and choppy waters ahead.
Following the start of Solvency II four years ago and a few rounds of “capital optimisation” programs, European insurers entered 2020 with their balance sheets looking shipshape. Since then we have seen high equity market volatility, a further fall in interest rates to historic lows and the widening of credit spreads over the last 3-4 months. Despite this, insurers’ balance sheets have held up very well. In conversations with our clients there is a glimmer of optimism that despite initial fears, they have a foundation to tackle head-on what is to come. Insurers are now operationally up and running and servicing their customers at pre-lockdown levels but to continue at that level they must remain financially robust.
FTI Consulting is helping companies navigate decision-making in light of these challenges. Learn how insurers can build resilience here: https://ftiemea.to/winningrebound