Risk Management
For a reinsurance company, well controlled risk is as important as adequate return. While 2008 was not a great year for PartnerRe from a return standpoint, I believe it was a stand-out year for our risk management systems.
We accept the fact that we are in a volatile business, with exposure to both insurance and capital markets risk. We cannot promise smooth results and ever-ascending book value. We do promise to pay meticulous attention to downside risk, and to manage our business in a balanced fashion so as to protect you from dramatic drops in shareholder wealth.
We do that by:
- eschewing excessive amounts of leverage
- pricing risk appropriately and consistently across the entire company – both in the reinsurance and capital markets
- valuing our long-tail liability exposures and our non-liquid invested assets prudently
- setting absolute exposure limits to the “killer” risks of casualty, catastrophe and equity/equity-like investments
Our risk management framework and system were tested in 2008 and we responded well. In a climate of volatility, our structure, strategy, capacity and workforce remained stable and intact. Elsewhere in this report, we describe in more detail the key factors in our risk management approach that ensure balance and so help to create that stability. Next >