Milliman consultants offer unique analytical skills and use proprietary tools, including MG-Hedge®, which equip our experts to paint a comprehensive picture of risk in today's rapidly changing global markets.

Our expertise extends to:

• gauging a hedge fund's risk profile based on transaction-level data
• developing risk profiles for investors in alternative vehicles including hedge funds, REITs, private equity, and leveraged buyouts
• analyzing mortgage prepayment behavior and its effect on the value of mortgage portfolios
• creating risk profiles for the guaranteed minimum withdrawal benefits associated with variable annuities
• evaluating market exposure for existing insurance products and for proposed new products

Mapping a concrete plan to optimize return versus risk

Our financial risk management team assisted a major insurer in moving into alternative investments for its surplus portfolio. Rather than making ad-hoc allocations to various asset classes, we employed analytical techniques to arrive at the optimal portfolio. Our calculations combined information on expected and historical returns with correlations between asset classes, including current holdings.

This optimal portfolio was structured to maximize return for a given level of risk measured at the portfolio level, as well as in terms of income statement volatility and capital requirements. A plan was then established to implement the selected strategy over a multiyear timeframe.