ARC is hoping to roll out its internal capital assessment model for discontinued underwriting operations to its members in early 2009.

This news follows last week's announcement that ARC had set up a key stakeholder group for the initiative.

ARC has linked up with Watson Wyatt to develop the model. Philip Grant, chairman of ARC, said "We realised a while back that it was only a matter of time before the run-off sector came under more pressure to improve internal capital modelling that informs its business decisions.

"We decided to test the waters and asked our members what they thought of the idea, and the feedback was good."

Grant said the Watson Wyatt product available at present for the live market was in the process of being adapted to create a model that is suitable for the run-off sector. "The first stage, which we hope will happen by early next year, will be to produce a model that we can roll out to our members at a relatively low cost," Grant said.

He added that the growing size of the European run-off market, estimated to be worth around €200m ($254.6), coupled with increasing awareness of the requirements of Solvency II, meant the need for internal capital models in the sector was now growing significantly.

Source: Insurance Day, Monday 3 November 2008