Important Points for IC 99 - Asset Management Exam
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Asset-liability management (ALM) is the practice of managing a business so that decisions and actions taken with respect to assets and liabilities are co-ordinated.
Stress testing helps insurers to ascertain the potential level of vulnerability to different scenarios, to manage their risks and maintain enough financial resources to manage them. Stress tests enable insurers to study the quantitative impact of different scenarios and its effect on the solvency of an insurer.
Insurers shall have an ALM policy approved by the Board of the insurer and shall be submitted to the Authority within 45 days from the date of this circular. The Board shall approve the insurers ALM policy, considering the asset-liability relationships, the insurers overall risk tolerance, risk and return requirements, solvency position and liquidity requirements.
The insurer shall examine all risks requiring the co-ordination of its assets and liabilities.
The insurer shall develop and implement controls and reporting procedures for its ALM policies that are appropriate for its business and the risks to which it is exposed.
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