According to Sherry Manetta, Head of Global Operations, Risk Solutions at Conning, insurance companies need a good economic scenario generator (ESG) to evaluate risks in external markets as well as internal business risks. While it aids in management decision making, it is also required by regulators and rating agencies to support risk management and solvency capital calculations.
Ms. Manetta says an ESG is just a starting point for a company to model investment risk and to better understand capital market risk. It can also be used to model other business risks such as GDP and inflation, and their impact on policyholder behavior, growth and loss reserve development.
For more on economic scenario generators and institutional investing for insurance carriers, visit the Conning website.