Printer Friendly

Looking Ahead.

Insurance professionals face myriad trends and economic factors that will change the way they do business this year, including financial-services deregulation, taxation, demutualization, securitization and capitalization. The following articles discuss some of those trends.

* "Mastering the Game." Insurers are up against new, formidable competitors who have less to lose. If they can master 10 issues, they'll be poised to come out ahead.

* "Price It Right." Traditional methods of determining public-offering prices of converting insurance companies have generally not resulted in optimal pricing for the companies or their policyholders. However, there are strategies insurers can pursue to strengthen a perception of fairness and equity in pricing the IPO.

* "Eyes on Demutualization." Regulatory, economic and market dynamics are forcing property/casualty mutuals to take another look at demutualization. Among those clamoring for demutualization will be baby boomer doctors and lawyers, who, as they near retirement, will want to realize a portion of their investment in specialty-line insurers.

* "Capital Ideas." There are several capital-raising alternatives available to small and midsized property/casualty insurers. In addition to issuing surplus notes or creating a downstream holding company, another strategy can be the formation of a strategic alliance than allows a group of insurance companies to share resources to assemble similar or complementary books of business, in essence forming a joint venture without merging legal entities.

* "Redeploying Capital." It is estimated that U.S. property/casualty insurers in aggregate have about 3.5 times the surplus strictly required to underwrite their current volume and mix of business. The amount of capitalization in the property/casualty industry is expected to grow as financial-services deregulation brings more competitors into the market. The challenge is to find the best way to use it.

* "Strategic Tax Planning." As financial services converge, hurdles to achieving the optimum tax position loom larger for the inexperienced. However, the changing landscape presents opportunities for those well-versed in tax strategies.

* "Postcards from the Home Front." Based on the evolution of mortgage securitizations, the capital markets won't have a strong appetite for risky, insurance-backed securities. And that may be a saving grace for the property/casualty industry.

* "All Together Now." Recent events such as the financial difficulties at General American Life Insurance Co. point to the need for insurers to adopt a more holistic approach to risk management that takes into account how the effect of risks in one area can reverberate through an entire organization.
COPYRIGHT 2000 A.M. Best Company, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2000, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Best's Review
Article Type:Brief Article
Geographic Code:1USA
Date:Feb 1, 2000
Previous Article:From Inkwells to the Internet.
Next Article:Mastering the Game.

Related Articles
Editor's Note.
Was it something we said? The government's defensive reply to TEI's amicus brief in Mead strikes a nerve.
Design competition winner The Wire reflects both strengths and weaknesses of tabloid format.
Airborne Laser program looks ahead to '04 test.
From Dr. Janice Campbell. (Letters to the Editor).
Rice won't admit 9/11-style attacks were predictable.

Terms of use | Privacy policy | Copyright © 2021 Farlex, Inc. | Feedback | For webmasters