Such a new-business strain typically originates from high initial distribution costs and is often amplified by prudent reserving requirements. As a result, not only can an insurer incur an initial strain on its cash position, but, depending on the accounting regime it is subject to, also an initial operating loss. Especially the latter strain stands in stark contrast to the overall expected profitability of the new business and its positive contribution to the insurer’s embedded value. In addition, it often erodes the insurer’s capital base.
Hannover Re has deve颅loped a range of tailored finan颅cial solu颅tions that enable our clients to write higher volumes of new busi颅ness without the need for addi颅tional capital or cash re颅sources. Often they also help the client to enhance its return on equity and stabi颅lise annual earnings.