The challenge

A European multinational was looking to outsource its Economic Scenario Generator (ESG) tool alongside seeking consulting support and improved regulatory compliance. The company was also looking for enhanced automation capabilities compared with existing ESG, prompting the search.

The client required a solution that included:

• objectification of key embedded parameters
• improvement of existing methodologies
• the ability to integrate some existing approaches within the new ESG solution

The approach

Part of the Milliman ESG offering is high-quality support from financial and modeling experts. During the Proof of Concept phase and the subsequent Request for Proposal, Milliman ESG teams worked with client, bringing their availability, knowledge of the local regulator’s requirements, and ability to support the transition to a new tool. The team also upgraded the client’s existing ESG process with similar but more effective methodologies and custom features.

Superior methodologies

Standard ESG solutions used a random-number generator algorithm to simulate randomness in economic models. During the proof-of-concept phase, Milliman ESG demonstrated its ability to reduce valuation leakage, resulting in a more stable solution. It also maintained continuity with the client’s previous approach. Likewise, Milliman’s approach to correlation, while similar to the client’s existing approach, offered a better method for justification compared to competing tools. This meant that the same methodology and governance around methodology could be used for regulatory justifications.

Custom features

As a flexible solution, Milliman ESG allows for enhancements to functionality and capabilities to match the business needs of each client. In this case, the Milliman team added several new features to meet this insurer’s IT requirements—something competing solutions did not support.

Single sign-on

Milliman helped to integrate the client’s single sign-on in Milliman ESG. Most ESG providers do not offer this functionality. The client connects directly to Milliman ESG with internal credentials using a physical keycard linked to user laptops.

The solution

Regulatory compliance plays an important role in implementing ESG solutions. When insurers evaluate ESG options, they often start with compliance capabilities. Once insurers are successfully compliant with regulatory frameworks, they can begin to focus on generating business value from the improvement of the ESG process.

Insurers often struggle to acquire an effective ESG tool from a provider who also offers a consultant team with reliable support. Conversely, an insurer might find high-quality support from providers with slower models that don’t meet regulatory standards. Put simply, the quality of the solution rarely matches the quality of the surrounding support. Fortunately, the Milliman ESG team provides both—consulting expertise in addition to an industry-leading solution.

By providing an effective solution alongside individualized support, the client found a better way to satisfy regulators.

Learn more about what Milliman ESG can do for you, here.