Life Insurers Pressed To Improve Financial Info: Watson Wyatt

Life insurance companies will feel increasing pressure to strengthen their financial management systems in 2008, according to experts at Watson Wyatt Worldwide.

Life companies need to improve their fiscal competence as they face shifting reporting rules and more intense risk-management demands in 2008, according to a report by insurance, actuarial and risk management specialists at WWW, Washington.

They point out that financial reporting in the life insurance industry is in the middle of major change, impelled by progress toward an international reporting standard and toward principles-based accounting for reserves and capital in the United States. Companies are also experiencing a wide range of information-related demands from regulators, rating agencies and shareholders.

“Life insurance companies are facing a host of pressures, and many are finding their current financial modeling software may soon be pushed to the limit,” said Craig Buck, leader of the U.S. life actuarial practice in WWW’s insurance and financial services consulting group. “Increasingly, there is a competitive advantage for executives who are able to undertake a sophisticated analysis of their company’s performance and explain it to stakeholders. This ability also can help increase risk-adjusted returns and identify trapped capital that has been dragging down performance.”