A year ago, we introduced new customized services in order to help our clients answer one simple but vital question:

How can we translate complex and dynamic experience data into coherent assumption models?

We all know why this is so important and essential for those responsible for new product pricing and competitiveness, quantification and management of inforce risks, and more predictable reserves, capital, and corporate financial performance. But how to do it is a very difficult question to answer using only traditional methods, even for us, with seriatim monthly data since 2007 covering approximately 70% of the US annuity market. Enter predictive analytics.

Combining these techniques with traditional methods in a collaborative and transparent process, we develop and help clients implement coherent assumption models that are based on relevant segments of industry data and tailored to each company’s product mix and situation, and that are flexible enough to accommodate the emergence of new data. These models include partial withdrawal and income utilization behavior under GLWB and similar longevity-based guarantees, with strong goodness of fit and predictive power. And the prudent use of industry data allows us to fill credibility gaps and provide metrics that demonstrate that these models are typically better than what individual companies can do using only their own data. This is why we are here.

We aim to be the platform and industry benchmark for principles-based insurance data analytics and risk management.

We encourage you to consider our services as customized investments in risk management. The benefits are quantifiable in terms of actual-to-expected ratios, product pricing, hedging efficiency, reserves, and capital.

Building on our strengths in the US annuity market, we are pleased to announce our plans to further expand and enhance our services in 2018:

  • Simplified pricing for variable and fixed indexed annuity experience studies of policyholder behavior, assumption models, and benchmarking. As always, our services will address the many factors of influence and their changes over time, including product and guarantee type, surrender charge period and duration, moneyness of guarantees on actuarial and nominal bases, contract size, tax status, age, gender, distribution channel and compensation structures, and income utilization and efficiency. This covers industry data and customized analysis for each client’s own data. Our industry data is more comprehensive than ever, as we have recently added several new clients totaling well over $100 billion in account value.
  • New mortality studies for both variable annuities and fixed indexed annuities, most recently completed in 2015 and 2016, respectively. This will include analysis relative to the Ruark Mortality Table for Variable Annuities, which we know many clients have adopted for assumption purposes.
  • As we remain committed to analytical excellence, useful delivery timing, and production speed in the services above, we aim to further automate our data gathering and scrubbing, shorten cycle times, and introduce new dashboard services that use clustering techniques to quickly benchmark and identify experience outliers for further investigation. This will not replace full-blown experience studies and related analytics, but would bring the whole endeavor much closer to real time, and improve our clients’ ability to take management actions earlier. These services will transcend product lines, and are part of our continued collaboration with the Goldenson Center for Actuarial Research at the University of Connecticut, a designated Center of Actuarial Excellence by the Society of Actuaries.
  • Begin gathering industry experience data for other products, such as traditional fixed deferred annuities, payout annuities, life insurance, and pensions, in the US and other jurisdictions. As these reach critical mass, we plan to offer similar studies and services as above.

2018 VA and FIA Behavioral Services

For each of:
VA Surrenders                       FIA Surrenders
VA Income Utilization          FIA Income Utilization
VA Mortality                          FIA Mortality
VA GMIB Annuitization
Option
Standard Premium

 

Experience Studies – industry results in aggregate, along with your company results, in a detailed report with numerical exhibits covering key factors, cohorts, and dynamics
Customized assumption model – initially calibrated to industry results, and tailored to your company based on credibility techniques
Review of your current assumptions, and comparison to the customized model above
Benchmarking of your results relative to peers
Presentation and discussion with our team
Membership on our Behavioral Analytics Advisory Council