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he recent proposal by the International Association of Insurance Supervisors (IAIS) to apply additional risk-adjusted capital       and could have adverse consequences on the  That is the view of Stuart Shipperlee, analytical partner, Litmus Analysis, who says the IAIS seems to be “joining the regulatory  as a potential threat to the stability of the global  “Other than when they choose to act as


21.10.13 MONDAY


New IAIS capital rules to hinder industry T


There are some scenarios that could cause


        failing could cause such a problem but the scale of its failure would need to be catastrophic to   of any given claim that the loss could trigger  A huge catastrophic event wiping out much


of the reinsurance industry in one fell swoop  a risk that really falls outside any reasonable application of regulatory


capital rules,” Stuart Shipperlee


        represent a systemic source of risk is debatable to say the least, particularly if that leads to a requirement for additional capital levels over and above those already considered prudent      regulatory


regimes such as Solvency II,”


                          systemic risk in question derives from the ‘contagion’ or domino effect when the failure of   may be caused either by the consequences of        money back and asset prices plunging—or by the knock on impact of bad debts on the failed


“Extra capital can mean only  insurance or more expensive 


  Such a scenario does not translate into


 investment related life insurance products can contain an option for policyholders to demand an immediate pay-out, any liquidity risk would  “A systemic problem would only result if a


      more manageable than controlling the nature and  


 He suggests that a sounder prudential


regulatory approach might be to simply prevent       Alternatively, a ‘mark to market’ approach


 universal direction of travel in accounting and regulation) would bring stability to the system  “Restricting, as it does, the ability of these otherwise natural ‘buy and hold’ investors          actually matters) this could simply make things a great deal worse, to wit preventing those         “Indeed, were that to be addressed then,


          insurers could be a source of systemic risk 


R&Q completes its largest acquisition since 2006 R


andall & Quilter’s (R&Q) recent acquisition of Cyprus-domiciled legacy


business Flagstone Alliance Insurance and Reinsurance (FAIR) from Validus is the most            acquisition the R&Q Group has made since         Lloyd’s RITCs apart, the level of net insurance  “Again, outside of Lloyd’s and the captives we have acquired at least, the business assumed,


although in run-off is more recent than many         primarily London broker-based business which  FAIR, which commenced underwriting in


  primarily international reinsurance business     million, a discount to the estimated adjusted net   The business, which is domiciled in Cyprus, will be managed by R&Q and assets will


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be held in UK based banks and custodian  country of domicile was not a consideration in  “FAIR’s country of domicile wasn’t an important factor when considering the acquisition, however, being with the EEA,      cross border merger and portfolio transfer mechanisms which afford us consolidation options to bring about operational and capital        


DAY 1: Monday October 21 2013 | BADEN-BADEN TODAY | 21


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