Asset Liability Management
Insurance companies increasingly feel the need to consider their strategic policy, risks, risk appetite and regulatory constraints in an integral way. This is primarily instigated by rapid developments in the field of regulation and governance (in particular Solvency II and IFRS). But increasing competition between insurance companies and challenging economic circumstances also call for the adoption of a wide-ranging and comprehensive policy. Insurance companies operate in a world that is uncertain and volatile. In order to make the right decisions, insight into the most important risk drivers is crucial.
Asset Liability Management (ALM) is a proven method for insurance companies to determine a proper risk-return trade-off in their investment portfolio, thereby taking into account the macro-economic developments and regulation. Asset Liability Management (ALM) studies are used to advise senior managers and boards of insurance companies on strategic policy issues and risk budgets. ALM studies address various allocation and hedging strategies, new and alternative asset classes, passive vs. active investments, leverage, derivatives and more.
Ortec Finance is a leading ALM provider for insurance companies. Our sophisticated software models and insurance advisory are based on three decades of experience. We offer a complete and consistent simulation framework for modeling insurance liabilities, asset classes, investment and dividend policies to improve understanding of the balance sheet dynamics and support strategic decision making.
Using this advanced model, insurers can answer questions such as: What is the optimal investment and interest rate policy? What are the consequences of the investment policy on Solvency II capital requirements? What is the impact of new business on profitability and capital requirements? What are the risks on the short and longer term and what is the impact of a worst case scenario in an ORSA context?
Complete Modelling Framework
- Consistent modelling of possible future developments of assets and liabilities
- Monthly/annual simulations provide a framework for decision making, monitoring and risk management purposes
- Multinational approach (able to aggregate plans with differences in currency, accounting standards (IFRS, IAS, US GAAP and FRS) and regulatory requirements (FTK, MFR, TLS, etc.)
- Cash flow or pension liability projections on member or cohort basis, by configuring specific pension scheme and valuation rules in the embedded actuarial pension module
- User-friendly software, customized to client’s needs
- Understanding the needs of our clients ensures smooth and practical application of our advice
- Support decision making on investment strategies, contribution policy and pension arrangements
Thorough Risk Assessment
- Simulation of future consequences in terms of relevant objectives and risk factors
- High-quality economic scenarios (DSG) based on more than 400 variables, including all major regions in the world