Actuaries are increasingly challenged to take a more strategic role in understanding the risks involved in our business and to find better ways to quantify and manage those risks.

Milliman has developed a suite of powerful modeling tools to help companies better understand the nature of their risk exposure and the potential variability in their reserve estimates. Our reserve variability model is sophisticated enough to provide in-depth actuarial analyses for all types of insurers. However, it’s also designed to help you explain your results to other important audiences, such as corporate executives, regulators, rating agencies, and board members.

The model helps estimate distributions of possible losses, both for individual lines and company-wide correlated totals. These distributions provide much more information about potential liabilities than traditional point estimate techniques. In addition to helping you assess reasonable ranges of estimates, distribution information can also provide:

• a clearer picture of how to more effectively allocate capital among business units
• key input into economic capital models, especially regarding reserving and pricing risk
• important insight into reinsurance requirements, including aggregate retentions and stop loss calculations

State-of-the-art model is key to successful financial planning

A large multinational insurer recently built an economic capital model. After reviewing the state-of-the-art analytics underlying our reserve variability model, the firm recognized that it could gain significant efficiency and improve its modeling efforts by using Milliman consultants and software as part of the larger project. We assessed reserving and pricing risk for the economic capital model and provided these inputs more quickly and in more detail than the company could have done with the tools it had developed internally. The company was then able to successfully demonstrate the strength of its capital position to investors, regulators, rating agencies, and other interested stakeholders, all under tight reporting deadlines.

Tools available for all insurers

Our reserve variability model is not simply a consulting tool. It’s a solution that was designed to be installed and used by insurers to better understand their business. We help clients learn to use it effectively and customize the model to suit each client’s specific needs and environment.