Capital management at an insurer


One of the world’s largest and fastest growing insurers appointed a new head of capital management who observed with colleagues that there was potentially USD 7 billion locked up in the business that could be freed and returned to shareholders. They knew what they wanted, but their challenge was in generating strategies for change to realise the opportunity.

AIA had a top team of actuaries and risk manager who had ideas about what needed to change at Head office. They also had excellent leaders in key countries including Singapore, China and Hong Kong. The challenge was to co-ordinate all the ideas into a logically incremental strategy for change.

What we did

As with all strategic engagements we started with seven basic questions What? Why? Where? When? Who? How? How much?[1] Typically, in engagements the ‘what’ is easy the ‘why’ and the ‘how’ are much tougher to define.

The ‘why’ challenge for the team here was its greatest: For the insurer to realise this massive opportunity it had to unpick significant product and sales initiatives at some of its business units. This meant that not only did the team have to create a strategy for delivery, but we also had to work with distribution, finance and risk leaders create strategies to mitigate the loss of product opportunities for agency, banca and broker partners.

We worked with stakeholders across Head Office and the country units to create realisation roadmaps for change delivery. These roadmaps started out as strategic options, which were worked through until the most suitable routes to success were agreed.

The roadmaps were graphically laid-out in steps demonstrating what needed to happen, when and by whom. They were a key tool in generating co-operation and good-will within the business because different departments were able to see how their deliverables impacted other stakeholders. These roadmaps were turned into plans for delivery and managed through delivery by the Innovation team.

[1] We have an in-house methodology called TASQPAD for this as well as B-SAT for options analysis.

The Outcomes
  • The team delivered six capital realisation projects.
  • The outcome was about USD 11 billion in surplus capital.
  • The insurer was then able to return this capital to shareholders and raised its dividend by 50%.