Stress-Testing: Balance Asset Values With Solvency II Regs

This sounds like quite a sophisticated asset values checking toolkit. Here’s the word;

Leading actuarial consultancy OAC (part of the Broadstone Group) has launched a new asset projection tool for investment managers working with insurers. The new tool, Summertime, allows investment managers to bridge the gap between their traditional analysis and actuarial analysis that Boards see from actuaries. As a consequence, investment managers will now be able to see the impact of their decisions on solvency to provide an enhanced service to Boards, joined up with actuarial analysis.

The tool seeks to address demand from investment managers for greater clarity following Solvency II reforms and the increased focus from insurers’ Boards on solvency risk factors. Solvency calculations have traditionally been performed by the actuary so investment managers – charged with managing the assets and proposing changes to the strategy – have been unable to transpose their investment strategy into solvency measures. The Summertime tool can take an investment manager’s asset data input and calculate the solvency measures for any proposed strategies they present. This bridges the gap to be able to present data in terms that matter to the Board.

Summertime is also able to support insurance companies with in-house actuarial or investment teams who can analyse asset data.

Darren Richards, Chief Executive of OAC, said: “This tool has the capability of stress-testing assets under market risk scenarios to understand how strategic investment decisions impact insurers’ solvency.

“Post Solvency II, we have seen growing Board-level focus on solvency requirements hence the importance of stress-testing assets and strategic investment decisions against market risks.

“Yet we are seeing a fundamental gap in the process, which Summertime aims to solve, whereby investment managers are unable to transpose their work against solvency measures. The ability to calculate the solvency impact of any proposed strategies will enable investment managers to provide a far superior service to insurers’ boards.”