The challenge
A medium-sized Dutch insurer felt that its growth was being held back by having to tie up too much capital. The challenge for us: to improve their solvency position. Because the insurer had a slightly different profile, the standard formula of the European regulator EIOPA was too strict. Therefore, we recommended adjusting the standard formula by applying company-specific parameters. This is a complex exercise. In fact, it was so complex that it had never been done before in the Netherlands. The insurer entrusted Triple A’s specialists to implement the company-specific parameters in the capital models.
Our approach
Through knowledge gained in other countries, we were well aware of what was necessary and possible in such a process. This background knowledge made the process fast and efficient. In addition to the arithmetical side, we also paid the necessary attention to the underlying dossier formation and coordination with DNB, given that the project’s success depended on approval by DNB of the modified model. It is important to us that the client can continue independently once we have completed our project. Therefore, we prepared detailed documentation and spent sufficient time transferring it to our own employees.
This is how we took the insurer further
The company-specific parameters we had derived and their implementation in the capital model were quickly approved by DNB. The new model has led to a material improvement in the solvency ratio. This gave the insurer the necessary room to invest in further revenue growth. After the complete transfer of the file, the data and the models, the insurer can now independently report to the supervisor – with the adjusted parameters. A complex project? Definitely. But we are proud that we were able to help this insurer so successfully with this challenge.
