Our client, one of the world’s largest life insurance and pension companies, and a strong provider of investment products, needed our help to develop an economic capital model.
Our assistance will help them in providing a foundation for their internal model under Solvency II to allow them to calculate their SCR and produce the ORSA. The flexibility of the framework will allow them to produce output at a very detailed level, for example to look at the effectiveness of each individual reinsurance contract. As well as model development, we also:
- provided robust and flexible modelling platform (Igloo)
- trained their staff on use of the software c) peer review modelling approach
- provided resource to design and implement the first version of the model
We have completed the build of the first model and are currently writing supporting documentation to assist the users. We are also in the middle of a training program for their staff to help optimise the use of the model.
Other uses for the model which they are considering are: performance measurement and pricing at the line of business level and for testing & developing business plans. By starting now they can give themselves time to utilise the output in the business and hence meet the “use” test which is a fundamental part of having an internal model accepted under Solvency II.
The model has been designed using our software development skills as well as the insightful industry knowledge EMB possesses and best practice experience. The tool is therefore designed to be flexible to allow for future enhancements and extensions (e.g. multi-year modelling). This is an extremely important factor for the client. We reviewed the modelling approach and have been able to use our extensive experience to compare this to approaches taken by other clients enabling us to promote best practice.
For further information, contact Richard.Millns@emb.co.uk
