Navigating an evolving regulatory landscape, insurers worldwide face a crucial challenge: how to efficiently manage the capital required to support equity investments without sacrificing potential returns.
Key takeaways
- Equity risk is a significant driver of Market SCR across global insurance markets: managing it effectively is critical under evolving regulatory regimes such as Risk-Based Capital (RBC) and Solvency II.
- Option-based targeted equity SCR strategies provide a structured way to balance protection cost, return potential and solvency impact, keeping equity SCR within a defined range.
- Risk mitigation effects are increasingly recognised by regulators, allowing insurers to reflect the impact of these strategies in their SCR calculations and improve capital efficiency.
- Implementation must be context-specific: parameters such as strike levels, maturities and hedge ratios are interdependent and must be carefully calibrated to portfolio, market and regulatory conditions.
- Real-world applications show measurable impact, with improved return-to-risk ratios, smoother solvency outcomes and more efficient capital use.
- A proactive approach to equity SCR management supports long-term resilience, enabling insurers to stay invested and unlock capital for future growth.
You can now read the full whitepaper at the link below
