Reinsurers top S&P’s ERM Score Card

Reinsurers are leading the pack in the implementation of enterprise risk management (ERM), Standard & Poor’s (S&P’s) says in its 2008 Global ERM Score Card.
S&P’s assessment designates a (re)insurer’s ERM as excellent, strong, adequate or weak. It considers approximately 80% of global (re)insurers to have adequate ERM, with about 15% in the strong or excellent categories and the remaining 5% in the weak category.
Of the 33 reinsurers assessed globally, about 39% have strong or excellent ERM, nearly 58% have adequate ERM and only 3% are in the weak category, S&P’s reports.
“Several reinsurers have more sophisticated, more volatile or more concentrated risk profiles than insurance companies do, which demands advanced risk management,” S&P’s suggests.
The more complex the reinsurer’s risk profile, the more demanding it is for the company to attain the highest ERM assessments, the ratings agency observed.
“Some of the most diversified global reinsurers have been at the forefront of ERM development because they have to be,” S&P’s sys. “However, the extent of their challenge is keeping many reinsurers out of the excellent category.”