Predict the financial future with data and analytics

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1 Aon Benfield Analytics Predict the financial future with data and analytics

2 Predict the financial future with data and analytics In a world of ever-evolving regulation and accounting standards, coupled with commercial pressures, the actuary s role is growing in importance. Following Solvency II and IFRS changes to name but a few, insurers are demanding more value from their investment in capital models. This trend is seeing a shift in how actuaries, catastrophe modellers and other risk analysts use models. There is a move from primarily identifying solvency capital requirements to exploring wider financial strategies such as asset allocation and business optimisation. Using Aon Benfield s award winning risk and capital modelling software actuaries can harness insurers data to optimise financial strategies and make important business decisions with confidence. By design, allows global insurers, reinsurers, consultants, captives and regulators to bring insightful, risk-based financial modelling to the forefront of strategic decision-making. Enhanced financial decision making Insurance and reinsurance professionals use for many different areas of decision-making, including: Reinsurance Strategy Which reinsurance should I buy? How much should I retain? Strategic Business Decisions Is my portfolio balanced? How can it be improved? Can I improve my investment strategy? Reinsurance Pricing What price should I pay for a particular product? How will this vary if the parameters change? Business Planning How can I grow the business without taking on too much risk? Capital Allocation How profitable are my various business lines based on the cost of capital and the risk?

3 Next generation platform This trend is seeing a shift in how actuaries, catastrophe modellers and other risk analysts use models. There is a move from primarily identifying solvency capital requirements to exploring wider financial strategies such as asset allocation and business optimisation. Version 7 is helping to transform the role of actuaries by introducing a new more efficient and scalable way of working. In practice, analysts will now be able to benefit from the following features: Core differentiators Build models without the coding A comprehensive library of advanced components that enable you to build a sophisticated capital model. Models can be understood quickly and easily by any user, removing key-man risk if a colleague leaves the role. Access your data quicker with transparent models New tools such as DataGrids, Key Properties and Message Views mean you can understand and diagnose your data. Answer questions like, What caused my bad year? with model re-run. Easy to conduct what-if deterministic calculations. Key features and benefits The core differentiators are supported by the following features: Features Built-in support for Python Benefits Full flexibility for implementing custom model logic and automation. Rich features of a mature programming language, but simple to learn and easy to use. Colour coding and automatic code completion. Data at your fingertips Customised reports through the embedded Excel interface Slick tools for looking at trial-by-trial information and debugging. Seamless interaction between models and input/output forms. Flexible reporting with no programming required. Easy to create custom reports for management and regulatory reporting. Scalable Fully 64-bit.NET modern user interface Enhanced random number generator Various options to run simulations easily over multiple cores, either on a single machine or over a grid of machines (Microsoft s HPC technology). Allows unlimited result sets to be saved to memory. Modern look and feel means you can work with multiple docked windows. s new random number infrastructure ensures that numbers are consistent, regardless of the hardware that the simulation runs on. Any trial is quickly and easily reproducible, a real boon for debugging and understanding your model. Less time creating models and more time making decisions. Mark Cockroft, Chief Actuary, Qatar Re

4 Choosing the optimal edition for your company 64-bit* Multi-threaded simulations View model results Change input parameters Data at your fingertips Edition Description Run-time Professional Enterprise Ultimate The size of results that can be saved to memory can be as large as your hardware allows. Automatically runs models multi-threaded without the need for any configuration: detects and runs your simulations across multiple cores (CPUs) available on your machine. Model results can be viewed using Excel-like results views plus other tools such as DataGrids. Input parameters are linked to the model by an Excel-like interface and can be changed to run different scenarios through your model. By providing tools for you to drill down into data and rerun specific scenarios, such as your 1 in 200, allows you to delve into and analyse your model at a more granular level. Model building Create and edit model structures. x Python indirect expressions Script automation and API Batch simulation tool HPC distributed simulations Database results Global Enterprise architecture Enterprise model automation through Workflows Advanced audit trail * Compatible with 32-bit excel now supports the Python programming language for model customisation and automation. Python is quick and easy to learn and introduces powerful new features to model customisation. Automation scripts can be developed in Python. Additional, add-ins can be developed in.net. A simple to use, but powerful tool is supplied to allow you to run multiple models. Incremental changes to parameters can be applied to each model run. Run over a grid of machines using Microsoft s High Performance Computing (HPC) technology. HPC intelligently load balances and manages jobs, meaning that the process of distributing across multiple machines is very robust. Furthermore, you just need to point at an HPC grid, and the client automatically performs set-up for you. The new generation of database schema in Version 7 is 40 times faster than the previous generation, giving more options for storing results. Ultimate Edition sits on a server stack meaning that multiple people from multiple regions can work on your model. The organisation can centrally control the model. Workflows allow you to graphically build automation processes without the need for programming. This allows you to join together multiple models and inputs. Workflows provide you with an open and flexible way of mass-producing and recreating model runs, which goes far beyond writing automation scripts. Advanced audit trail features log each time changes have been made to inputs and logic. You know every time your model has been run, by whom and with what inputs and logic. This is important so you can recreate any model run in the future.

5 Customising your capital models has been designed so that you are equipped to build your own models, no matter how sophisticated or complex. Many clients are in a position to build their own models after only a day of training and we have a dedicated support desk on hand to answer any of your queries. However, as commercial and regulatory demands continue to grow in scope and sophistication, so do the models and this is when the family steps in. Our team of actuarial consultants delivers customisable modelling solutions, including model advisory, implementation and validation services. Clients benefit from a broad knowledge of emerging market practices, capital model evolution, regulatory requirements and modelling techniques, plus software implementation, to deliver efficient and valuable modelling solutions. Software Software Developing the core software Training and support London Singapore Actuarial Consulting Actuarial modelling experts Model advisory, implementation and validation London Zurich New York Actuarial Consulting Applications Applications, IT and data specialists Custom products built around such as PACE, AeroMetrica and CyberMetrica Aon s consultants market knowledge and depth of technical expertise helped us develop the optimal structure. Gary McInally, Chief Actuary Flood Re Case Study Delivering a robust Solvency II model implementation for a start-up reinsurer Challenge A start-up UK reinsurance company engaged Aon to implement its internal model in, working to a very tight deadline. The company was due to start writing business the following year and a key requirement was the ability to monitor the modelled financial position versus its existing spreadsheet-based business plan model at regular intervals. The management team required a 5-year model, which was capable of producing financial statement forecasts at monthly intervals. Solution We worked with the company to design a robust and efficient model structure in that was validated through a series of tests and met the needs of all key stakeholders. The final phase of this project involved a comprehensive handover of the model to the internal capital team, many of who were new to the platform. We ran a number of workshops, explaining each aspect of the model in turn and developing test cases to illustrate the model functionality. Benefits The findings enabled the senior management team to assess how the financials would develop as the new business grew.

6 Making the most of Our suite of Applications means that you can integrate systems to enable a wider, enterprise view around underwriting, portfolio optimisation and Solvency II reporting. Our specialist team of developers has created a number of applications to build on the core strengths of : Product in the Cloud PACE Portfolio Optimiser CRAFT ASTRA AeroMetrica CyberMetrica Description allows you to extend your current processing power by sending models to your own Virtual Private Cloud. in the Cloud uses the latest specification servers to build a processing grid on-demand for your model. This means you only pay for the processing power that is used. Aon s PACE (portfolio accumulation control & evaluation) is a single tool that enables reinsurers to price programmes, maintain their portfolio and quickly see the gross and net probable maximum loss (PML) by peril/region from a number of different perspectives. PACE integrates into the underwriting workflow. Portfolio Optimiser provides analysis into the optimisation of risk and return of a portfolio using the conditional value at risk (CVaR) measure. Portfolio Optimiser seamlessly interacts with result allowing you to easily define an optimisation problem. CRAFT (the Curve for Risk Analysis Fitting Tool) allows you to fit statistical distributions to sample data. Being focused on risk analysis, CRAFT is designed to fit bounded datasets, and includes an array of tools for analysing the fitted distributions from a risk analysis point of view. ASTRA is an Excel-based Solvency II Standard Formula tool, developed by Aon in response to the demand for a simple, easy to use and cost effective solution to completing the standard formula calculation. AeroMetrica is a ground-up aviation excess of loss pricing model and aggregation tool. It sets the benchmark for excess of loss pricing for major risk business, allowing for detailed pricing, volatility and reinsurance optimisation analysis. CyberMetrica provides insurers with a way to identify key points of aggregation, and develop bespoke scenarios to model crucial concentrations of risk across the full range of first and third party cyber coverages. Dedicated user support When you choose, we welcome you into the community to benefit from: Customised training including regular user workshops. Expert help desk via telephone or to share solutions quickly, meaning you do not have to spend time or resources looking for answers. support website, which includes the latest news and releases, details of upcoming events and training, and various other resources for you to download. From the practical training sessions and expert helpdesk to the annual user conference, the high level of support means we can build our models efficiently and we feel part of the community. Christof Grass, Head of Cat Perils, Group Reinsurance, Zurich Insurance Annual conferences and workshops in the US, London, Singapore and Tokyo for users to build their technical knowledge, network and discover s latest enhancements.

7 Contact For a demo, please contact your local Aon Benfield broker or: Paul Maitland (APAC) paul.maitland@aonbenfield.com Dean Roberts (EMEA) dean.roberts@aonbenfield.com Michael McClane (Americas) michael.mcclane@aonbenfield.com Awards PACE Insurance Times: Technology Innovation of the Year for Life, Health, and Pensions Reactions: Technology Solutions Provider of the Year Aon plc (NYSE:AON) is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance. Aon Benfield Inc All rights reserved. This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances. This analysis is based upon information from sources we consider to be reliable, however Aon Benfield Inc. does not warrant the accuracy of the data or calculations herein. The content of this document is made available on an as is basis, without warranty of any kind. Aon Benfield Inc. disclaims any legal liability to any person or organization for loss or damage caused by or resulting from any reliance placed on that content. Members of Aon Benfield Analytics will be pleased to consult on any specific situations and to provide further information regarding the matters. Aon UK Limited is authorised and regulated by the Financial Conduct Authority. FP #12875 GDM03498