Starting situation – how can capital be efficiently managed in an insurance company?
Value-based controlling presents particular challenges in the insurance sector, especially in terms of dovetailing with risk management. However, given the current “credit crunch,” it is more important than ever that the internal capital market supplies high-yield units with sufficient capital, and that risk is consistently and adequately reflected in controlling. In the project in question, an international insurance company commissioned Stern Stewart to develop a value-based controlling system to optimize the controlling of risk capital and allocate it within the insurance company to maximize value.
Project approach – value-based controlling system with a transparent allocation mechanism
A customized control system was designed for the insurance company, based on the principle of maximizing value. The focus was on establishing a transparent risk control system, as well as an allocation mechanism for risk capital. This mechanism needed to meet the needs of the individual divisions to ensure the smooth implementation of the control system in all the operational units. The optimized control system was anchored in all of the company’s locations with the help of a global change management initiative.
Finding – value controlling as the basis for transparent risk capital allocation
To avoid disagreements within the company over the allocation of capital, a transparent control system is needed that allocates risk capital to the operational units in a way that maximizes value. In this context, a control system based on added value is the ideal solution.
- Value-based controlling designed with transparent allocation of risk capital.
- Control system implemented with change management initiatives.