Supporting our clients on their 2021 journey


Colin Holmes, Managing Director of Moody’s Analytics, explains how the solutions provider is helping insurers move through 2021 and prepare for the future with the breadth of its capabilities and expertise

What are Moody’s Analytics’ focus areas in 2021?

First, we have the ongoing challenges of Covid-19 and climate change, which present challenges for the industry and a lot of uncertainty to navigate.

Drawing on Moody’s Analytics’ experience in scenario modeling and insurance analysis, we are working with a number of insurers who are beginning to test the financial impact of physical and transition climate risks. We also allow our clients to monitor and manage their financial situation in real time in a volatile environment.

Insurers also face significant changes through accounting changes with IFRS 17 and IFRS 9. This continues to be a priority for us as our clients prepare for parallel cycles in 2022. In this area, we have clients that we have been working with for a few years, while other firms are at an earlier stage and are only now selecting their supplier as they prepare for what is a significant change in business processes. ‘business within the actuarial, risk management and accounting teams. With companies running out of time to make decisions, we can offer insurer support through our “ vendor-managed ” approach, which integrates our methodologies into our software, allowing insurers to benefit from the experience we have gained from working with the main insurers. Combined with a SaaS model and our experience advising on implementation, Moody’s Analytics can help companies make change over time.

Beyond specific accounting changes, we have clients who also see this as an opportunity to modernize actuarial systems, which drives continued demand for our AXIS ™ actuarial modeling software.

As we all know, IFRS 17 introduces new computationally demanding calculations that legacy systems can struggle to keep up with, while our cloud capabilities allow actuarial teams to spread the calculations across thousands of processor cores to do in the face of these demands.

What is the impact of climate change on insurers?

Insurers and regulators are increasingly focusing on understanding financial resilience in the context of potential climate trajectories and the physical and transitional risks that different scenarios involve.

This is a difficult field, which requires a combination of disciplines – from climate science and economic forecasting, to actuarial modeling and analysis. This builds on our strengths, with the breadth of capabilities we can offer, and we are delighted to be working with a number of insurers to help them develop scenario analyzes, for example to support their own risk assessment and solvency. With regulators in many countries, including the United States and Canada, reviewing the practice, this is an area we expect to be very active in over the next few years.

Moody’s Analytics has invested heavily in ESG and climate capabilities, for example through our subsidiaries Four Twenty Seven and Vigeo Eiris, which places us in a unique position to help insurers meet these challenges.

Insurance investing continues to be a key topic, how are you helping the industry in this area?

Returning to the climate challenge, we help investors make more informed investment decisions through our company-level data, combining perspectives on credit risk and ESG. Also supporting the front office, we have added real-time fixed income attribution capabilities to our PFaroe ™ suite of solutions, including the ability to analyze the impact of ESG factors on investment returns.

In North America, we are very active in helping insurers manage credit portfolios. We also provide bond factor advice for risk-based capital assessments in the United States.

Finally, we have another new product in our RiskIntegrity ™ suite, slated for release later this year, that will support the investment and ALM teams with a liability-sensitive asset strategy.

While the current situation remains difficult for all of us in many ways, we are proud to do a great job with our clients and are excited about the future.

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