Insurance

Capital modelling and validation

Capital modelling is a powerful tool for understanding risk profiles and making better business decisions, in addition to calculating regulatory capital.

Capital models govern how rating agencies and regulators assess financial strength. But they are also a valuable tool in deploying your capital in a way that supports your strategy within well-defined risk appetites.

Our capital modelling and independent validation helps clients to use their models with greater confidence and to meet regulatory requirements efficiently. We help clients cut through model complexity and put their board in a strong position to understand, challenge and use the model.

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Optimal use of capital is crucial to sustainable underwriting success

We can help clients to:

Gain assurance on the reliability of their capital model via independent validation.
Bring together the capital model, reserving and underwriting views of the business to enable joined-up strategic planning.
Challenge their measurement of key risk areas via deep dive reviews.
Better align their capital modelling with risk appetites.
Incorporate emerging risks more effectively in their capital assessment.
Build new capital models (or add functionality) and review software platforms and processes.
Perform periodic under-the-hood assessments of their capital model’s effectiveness.

In recent years, we have supported over 80 insurers with assessing their economic capital requirements, including through independent model validation.

Our comprehensive capital modelling benchmarking studies offer clients the opportunity to measure themselves against the market and identify areas for improvement. And our Heads of Capital and CRO roundtable communities give clients a live sounding board to gain insight from both LCP experts and market peers.