Regulatory changes, ongoing economic challenges, lingering hard markets: these are some of the key situations that have converged to create a challenging environment for CFOs charged with managing profitable operations of insurers. While there is no easy solution to these challenges, there are lessons that can be learned from successful strategies deployed across the industry. Sharing that insight is the focus of today’s CFO roundtable.

The CFO Roundtable has been a popular choice with financial executives since it was first introduced at the IASA conference. The five-session, day-long roundtable features insight from economists, auditors, solution providers, and other specialists. It will cover topics of key concern to CFOs, including the growth of analytics, regulatory changes and convergence, and the use of reinsurance strategies to achieve profitable growth.

“Our primary goal in assembling our roster of panelists and speakers is to find people with deep knowledge, expertise, and experience in issues that matter most to CFOs, and who also have the ability to translate their experience into strategies and tactics that insurers can use,” says roundtable organizer Mike Graham, senior vice president of The Plateau Group.

The roundtable begins with a session led by Donald Ratajczak, PhD, emeritus professor at the J. Mack Robinson College of Business at Georgia State University and a consulting economist for businesses and governmental agencies. Called the nation’s “top economic guru” by BusinessWeek magazine, Ratajczak is a recipient of the Blue Chip award for forecasting accuracy. His session, titled “Insurance Industry Economic Outlook: What’s Next and How Does it Affect CFOs?” will present predictions of future economic conditions, financial markets, government debt, and other areas, exploring their likely impact on the insurance sector.

 The ongoing economic crisis has created an environment of financial uncertainty and regulatory change. In this environment, failure to consider information about potential shifts in premium revenue caused by both the economy and insurance market conditions can significantly impact an insurer’s pricing, premium growth strategies and profits—making accurate information and trend forecasts areas of critical importance to CFOs.

Effective Analytics

The second morning session will feature a panel discussion on analytics, called “Overcoming ‘Operator Error’: Best Practices for Putting Analytics to Work.” The session focuses on the ways to implement or enhance the use of analytics within an insurance organization.

“The term ‘operator error’ relates to the fact that insurers don’t have a shortage of tools but, rather, a shortage of expertise on how to use them,” Graham says. “We are going to look at how organizations can extract, analyze, and use data effectively with currently available solutions: how can you really make analytics work for your company, and what are the real benefits companies are gaining today?”

The session features several specialists in the analytics field. Moderating is Bill Freitag, CEO and managing partner, Agile Technologies. Panel members include Craig Bedell, worldwide industry executive – insurance business analytics, IBM, and Ajay Bhargava, director – analytics, Tata Consultancy Services.

Graham points out that analytics have never been more important to insurers than in today’s current economic climate. “Analytics are playing a crucial role in helping companies create and execute on critical business strategies,” he says.

The theme of analytics continues in the luncheon program, also led by Bedell. The luncheon session will look beyond the role analytics plays in today’s business of insurance and provide examples of where leading-edge analytics are now focused, including predictive analytics.

Insurers are using predictive analytics to operate better at both the strategic and tactical level.  Strategically, analytics are essential to the highly tiered rating structures used by leading carriers today. Tactically, analytics can supplement the years of experience and knowledge of expert staff by using algorithms to determine future account performance, claims outcomes, and more.

Regulations and Reinsurance

Afternoon sessions focus on regulatory and reinsurance issues. The first afternoon session, “Audit and Regulatory Revelations: Keeping Pace with the Issues,” highlights the rapid pace of change in accounting and audit issues that challenge insurance-industry CFOs. Speakers include three partners from Johnson Lambert & Co. LLP: Gary Bowers, CPA; Bradley Diercx, CPA; and James Murphy, CPA.

The audit session targets a wide range of topics—issues and initiatives in front of the NAIC, FASB’s financial instruments exposure draft, and more. “What challenges most CFOs is the large number of accounting pronouncements that are coming along, seemingly on a daily basis,” Graham says. “Issues around FASB/IASB convergence, new tax developments, and other areas highlight what a state of flux the regulatory environment is in.”

The Johnson Lambert panel will examine steps some carriers have already taken to get ahead of audit changes. It will also provide insight into the areas that will most significantly impact statutory accounting. “We hope to cover the key issues that are of primary importance to insurers today, as well as to take a look into both the near- and long-term future of regulatory reform,” Graham says.

The final session of the day deals with strategic uses of reinsurance and is led by Bill Kennedy, Guy Carpenter’s CFA, CEO of Analytics, Capital Markets, Specialty Practices and Advisory. Kennedy will examine the current catastrophes—from the tsunami in Japan to tornadoes in the U.S.—and their impact on the reinsurance market; however, the majority of the session will look at how to use reinsurance to finance profitable growth.

Although insurers continue to explore new markets, undertake mergers, acquisitions, and strategic alliances, and create innovative products to spur growth, capital modeling and properly-structured reinsurance solutions are necessary to achieve optimal results in today’s environment.

“Despite the number of catastrophic weather events, insurers’ balance sheets are in a strong surplus position,” Graham says. “This is impacting their return on equity. Using reinsurance is a way to use excess capital to create positive growth.”

The opportunity to gain knowledge from industry financial professionals “in the trenches” makes this session a must-attend opportunity for busy insurance execs. “The CFO Roundtable is a one-stop shop to explore issues of key importance to today’s insurance CFOs,” Graham says.