Case Study

Insurance giant reduces risk-based capital by $19.4 million

Print This Page

Client: A major life insurance firm

Industry: Insurance

Business need addressed: The insurer sought assistance in reviewing the company’s methodologies for valuing and categorizing its assets, to ensure the company was holding the right levels of risk-based capital

Genpact solution:
Following a thorough analysis, Genpact recommended reclassification of assets that reduced the levels of risk-based capital the insurer was required to hold

Business impact:

  • Customer satisfaction
  • Adaptation and flexibility
  • Regulatory compliance
  • Growth and scalability
  • Standardization and simplification

A major life insurance company was concerned that its asset valuations and classifications were not correct, and thus that the company was not holding the correct levels of risk-based capital for regulatory purposes. The insurance giant engaged Genpact to review the company’s methodologies for valuing and categorizing its assets, in hope it could reduce the risk-based capital the insurer was required to hold.

The client worried that its methodologies for valuing and categorizing assets were incorrect, leaving it needlessly overcapitalized

  • In recent decades, regulators have increasingly required financial institutions to set aside capital reserves that correlate to the amount of risk on the companies’ balance sheets
  • This calculation of “risk-based capital” represents the additional capital set aside over and above the normal capital to safeguard the interests of the insurer’s policyholders
  • Insurance regulators determine their solvency ratings in part based on the amount of “risk- based capital” that each insurer holds, creating incentives for these companies to make sure their risk profile is calculated correctly

Take a copy for yourself

Download PDF
  • The client was concerned that the methodologies it used for categorizing and valuing its assets were incorrect, requiring it to hold higher amounts of risk-based capital than warranted. This, in turn, could negatively impact the client’s solvency rating with regulators

Genpact conducted a thorough review of the client’s valuation and classification methodologies

  • Genpact’s investment team supported the life insurance giant in accounting, reconciliation, and statutory reporting of various assets
  • For the statutory reporting prepared for regulators, Genpact calculated and prepared the asset valuation reserves and the risk-based capital and schedules filed quarterly and annually with the National Association of Insurance Commissioners
  • Genpact analyzed the insurer’s categorization of all investments and implemented correct categorization methods. This analysis included interpreting investment-related Statements of Statutory Accounting Principles

Business impact delivered

  • Genpact’s success reclassifying and reassessing the correct valuation of some assets enabled the insurance giant to reduce its risk-based capital requirements by $19.4 million, yielding greater compliance with regulatory requirements
  • Partnering with Genpact enabled the client to be adaptive in an evolving regulatory normal

For more information, contact, and visit,

Continue Reading

Let’s talk about what you’re interested in.

Let's Get Started