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Aon launches Capital Advisory team to strengthen insurer P&Ls
New team takes a holistic approach to managing assets and liabilities

 

MONTE CARLO (9 September 2018) – Aon plc (NYSE:AON), a leading global professional services firm providing a broad range of risk, retirement and health solutions, has launched its Capital Advisory unit within Reinsurance Solutions to deliver a holistic approach to capital optimisation for re/insurers, Lloyd’s syndicates and captives.

In the current environment, re/insurers are facing challenges of low growth, underwriting margins and investment income. Capital requirements, on the contrary, remain high due to regulatory and rating agency obligations. As a consequence, it is becoming more difficult to generate return on common equity.

The goal of Capital Advisory, led by Eric Paire, who joined Aon from Guy Carpenter in March 2018, is to help clients achieve capital efficiency either by accessing alternative or traditional capital, or identifying opportunities that make better use of existing capital, while taking into account cost and returns. 

To deliver this, Aon has brought together its expertise in reinsurance (from treaty to loss portfolio transfers and adverse development covers), P&C and Life, Analytics, rating agency advisory, asset management, M&A and capital markets, to provide bespoke advice to:

  • Reduce Solvency II capital requirements via reinsurance
  • Improve insurers’ investment strategy to drive investment efficiencies, thereby uniting management of both their assets and liabilities
  • Optimise insurers’ capital mix

Nick Frankland, UK CEO of Aon’s Reinsurance Solutions business, commented: “In a low interest rate economy with pressure on returns, we are committed to working with insurers as their strategic partners to optimise the capital supporting their businesses. We have a head start with our intrinsic knowledge of clients’ operations as their reinsurance intermediary, and can bring an additional focus on P&L with our specialist skills from across Aon.”

Eric Paire, Head of Capital Advisory within Aon’s Reinsurance Solutions business, added: “There is no single move, no silver bullet, that will restore insurers’ profitability overnight. It is all about fine tuning and optimising the various components of the P&L and the balance sheet for increased operating and financial margins, and an enhanced capital mix, while reducing volatility and allocated capital for a lower cost of capital.”

Currently based in London, the goal is to expand the Capital Advisory offering to the US for a global approach.

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