Beware the cost of future returns

As Bermudian insurers prepare for the implementation of new regulations based on the proposed European Solvency II framework, it is timely to consider the implications for the asset side of the balance sheet. While most insurers have sophisticated models with which to analyse and forecast their liabilities, such rigour has rarely been applied to insurers’ assets until the introduction of the Bermuda risk-based capital regime (Bermuda Solvency Capital Ratio—BSCR) in 2007-8.