Although core inflation remains tame today and for the foreseeable future, the tremendous amount of liquidity the Fed has provided to the market, coupled with the devaluation of the dollar, point to increased inflation risk somewhere down the road.
Recently, Conning released two research reports, both of which focus on the implications that rising inflation could have on insurance companies from both business and investment perspectives.
Conning’s strategic study, “Inflation in Property-Casualty Insurance: How Bad Can It Be?” highlights some of the signals for detecting increasing inflation, what impact inflation might have on property-casualty operations and how that impact might present itself. Although the issue is complex, we offer our clients some solutions and approaches to addressing inflation risk in an enterprise risk management context.
In addition, our recent Asset Management Viewpoint, “The Art of Seeing Nobody – Inflation, Insurance and Investing in 2010” stresses that regardless of whether inflation is going up or down, it most assuredly affects insurance companies, their investments and the ALM strategies they choose. Some lines of business are hyper-affected by inflation, for example upper layer pro-rata and quota share reinsurance, while others are largely unaffected, such as fixed dollar per occurrence health coverage.
At Conning, we frequently examine complex issues from several perspectives in order to provide informed analysis and opinions to our clients; these inflation analyses are a good case in point.
We view this year as one of great opportunity for both our clients and Conning. Our goal is to provide unique value to our clients and constituents through our blend of skills and services that span insurance industry market intelligence and insights, comprehensive investment management expertise, and both quantitative and qualitative strategic advisory services.
Sal Correnti
Chief Executive Officer
Conning & Company