Insurance companies increasingly use complex models of their business to
gain an insight into financial strength, levels of capital required, asset
investment strategies, management strategies and the effect of business plans.
Regulators such as the Financial Services Authority (FSA) are demanding
insurers use such models following a shift to risk management-based regulation,
which means that financial modelling has become an essential tool for insurance
company management.
PwC works with companies and regulators to develop innovative approaches to
designing, developing and implementing financial modelling strategies across
enterprises. We have technical expertise not only in model design and model
building but also in financial economics, codifying management behaviour,
project management and risk management. Application of these skills will allow
improvement of a company’s risk management, capital management and performance
management capabilities.
How we can support
you
More about this
service
Potential issues
- You need to implement the FSA requirement for realistic reporting and
internal capital assessments (ICAS)
- You want a clearer understanding of the risks and dynamics of your
business
- You want to adequately reserve for guarantees or options in products and
develop hedge strategies, if appropriate
- You need to understand the key drivers behind the incentive of influencing
regulatory capital levels
- You want to investigate bonus strategies and effects on solvency positions
of the fund
- You want to understand the effects of different reporting and profit
measures such as Risk Based Capital Requirements, Embedded Value, Enhanced
Embedded Value, Next Generation Embedded Value, US GAAP, IFRS (International
Financial Reporting Standards), etc.
How we can support you
- Provide management with more useful information relating to strategic
decisions
- Improve capital management
- Gain understanding of the dynamics of a company and the factors that need
to be considered within the risk management framework
- Provide understanding of the solvency position of the fund/company and
requirements for capital under different investment or management
scenarios
- Demonstrate to the regulator that management have integrated financial
modelling into the decision-making process.
More about PwC's financial modelling services
- Technical expertise in financial economics
- Codifying management and policyholder behaviour and integrating principles
and practices of financial management (PPFMs) into the model design
- Building models, including secondment of teams
- Project management and implementation, including quick wins and assurance
on time frames
- Advice on appropriate financial modelling tools (for example MoSes)
- Advice on regulator’s perspective of implementing financial models
- Development of risk management framework
- Advice on communication of results from models to appropriate stakeholders
and embedding financial models into management practices
- Development of a capital management framework
- Technical expertise on reporting and profit metrics such as US GAAP, IFRS,
Embedded Value, Next Generation Embedded Value, Enhanced Embedded Value
etc.
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