Impact of the Financial Crisis and Impact of the Financial Crisis and Lessons LearntLessons Learnt

Helen RowellRegional Information Session, Cape Town

5 March 2010

Impact of the Financial Crisis and Lessons LearntHelen Rowell

2March 2010Cape Town

Impact of the Financial Crisis and Lessons LearntImpact of the Financial Crisis and Lessons Learnt

• Impact of the GFC in Australia

• Emerging issues during the GFC

• Lessons learnt

• APRA’s focus for 2010 and beyond

Impact of the Financial Crisis and Lessons LearntHelen Rowell

3March 2010Cape Town

Impact of the GFC in AustraliaImpact of the GFC in Australia

• Australian financial sector has weathered the GFC well

• Life and general insurers remain well capitalised

• Volatility of balance sheets in late 2008 and early 2009 has eased

• Financial results remain under pressure but still generally sound

Impact of the Financial Crisis and Lessons LearntHelen Rowell

4March 2010Cape Town

Emerging issues during the GFCEmerging issues during the GFC

• Volatile/deteriorating solvency positions – all industries

• Funding & liquidity constraints – primarily banking & wealth management (pensions)

• Contagion risks – particularly impact of unregulated entities

• Balancing capital and funding/liquidity needs of all group members

• Constraints on access to additional capital & funding for branches and subs

Impact of the Financial Crisis and Lessons LearntHelen Rowell

5March 2010Cape Town

Lessons learntLessons learnt

• Need to be better prepared for speed of change – APRA and entities

• Having the right information to assess and an efficient decision process is key

• Need for regular and effective communication with entities and other regulators

• Weakness in risk identification & management

• Stress testing not stressful enough

Impact of the Financial Crisis and Lessons LearntHelen Rowell

6March 2010Cape Town

APRA’s focus for 2010 and beyondAPRA’s focus for 2010 and beyond

• For insurers, mostly focused on solvency and underlying financial performance

• Additional focus on stress testing – better understand impact of different drivers

• Heightened and proactive supervision

• Increased liaison with other regulators

Impact of the Financial Crisis and Lessons LearntHelen Rowell

7March 2010Cape Town

APRA’s focus for 2010 and beyondAPRA’s focus for 2010 and beyond

• Identification of top industry risks and action plans to address

• Review of risk and capital management processes - Internal Capital Adequacy Assessment Process

• No material regulatory changes from GFC – but some policy projects in train

Impact of the Financial Crisis and Lessons LearntHelen Rowell

8March 2010Cape Town

Impact of the Financial Crisis and Lessons LearntImpact of the Financial Crisis and Lessons Learnt

Thank You!

Any Questions?