Supporting financial stability

Re/insurance supports financial stability by acting as a shock absorber and by promoting growth. Through its core business, it helps to reduce the impact of major risk events on the broader economy and provides it with long-term investment finance.

However, regulatory reforms, the macro-economic environment and asset-liability matching are three areas that currently impact re/insurers’ balance sheets and their ability to promote financial stability. Taken together, these three pillars form the basis of our Top Topic “supporting financial stability”.

Financial stability emerged as a key topic in re/insurance after the 2008/2009 financial crisis, which revealed flaws in the supervisory system. New regimes were introduced to address the root causes of the crisis. Today, insurers face a new dimension of macro regulation and new institutions unfamiliar with our sector. This is particularly relevant now, given the ongoing debate on systemic risk in re/insurance and the impact of regulatory reform on investments. That is why we expanded the financial stability topic in 2014 to include infrastructure investment reform and developing business from Solvency II.

Our notable achievements in 2014:

• We cooperated with the Institute of International Finance (IIF) to publish the report “Infrastructure Investing. It Matters.”, which highlights the importance of infrastructure growth and partnerships to fund its investment;
• We collaborated with the World Bank’s Global Infrastructure Facility (GIF) as an advisor to help establish infrastructure investments as an asset class and to provide innovative insurance risk solutions for infrastructure investments (see section “Focus: Collaboration with the World Bank”);
• We continued to keep a close eye on Solvency II developments, seeing as reinsurance can have a measurable effect on our clients’ capital requirements.

For more information see Financial stability