Sophisticated, risk-based, decision-making frameworks and strategies for managing drivers of variability in financial performance.
Capital modelling & capital management
We take a holistic approach to analysing and modelling the key risks and financial drivers of insurer performance and capital needs (such as premium, claims, catastrophic events, investments, and operational risks).
Sophisticated advice on key drivers
Our capital modelling expertise allows you to deeply understand risk profile, profit volatility, capital needs and financial management strategies open to you.
Our models are sophisticated, yet flexible to simulate the financial performance of a company. Our deep expertise brings a wide range of advice tailored for an ever changing climate.
Used to assist or review your own internal capital models for governance and improvements.
Our capital management expertise supports...
Capital management framework (including ICAAP)
Risk measures and risk informed performance benchmarks
Asset return & economic modelling
Our proprietary asset model simulates asset returns for a variety of different asset classes, as well as simulating economic variables such as discount rates and inflation rates. They underpin our internal capital models and are used to analyse general economic linkages to insurance variables, for example between unemployment rates and claim frequencies. Such analyses feed into pricing and reserving decisions for products such as lenders mortgage insurance and Workers Compensation.
Our detailed modelling of financial risks informs strategic advice for insurers wishing to use asset mix to adjust their risk profile. Using models of asset return volatility we are able to determine the impact of asset mix on the risk profile and profitability of the company and to assess optimal asset mixes that improve capital efficiency.
Our internal capital models capture all the nuances of reinsurance programs and their impact on risk and capital needs. Optimise reinsurance arrangements and maximise the efficiency of capital use.
- Treaty analysis
- Analysis of reinsurance treaties impact on the risk profile and profitability of the business
- Internal pricing and cost allocation
- Optimal program design and reviews (with respect to cost and protection provided, using risk and return measures as the decision variables)
- Determine the contribution to profit volatility of each business unit and how to equitability allocate the cost of reinsurance among business units.
Allocation of capital to specific sub-divisions of an insurer’s business enables the setting of profit targets at a group, company and product level in a manner consistent with overall return on capital targets. This process allows targets for return on capital to properly reflect the risk profile of the products or business concerned, and allows clients to:
- understand the impact of the mix of products on the risk profile and profitability
- identify the sources and value of diversification with the company.
Powered by smart, results-oriented people with unrivalled depth of industry experience, we can provide a unique perspective across a wide range of business challenges.Contact us