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ACO utilization & cost evaluation
Healthcare cost modeling
Insurance risk assessment
Medicare plan selection solution
Healthcare risk adjustment
Pharmaceutical claims analytics
Meet growing needs for innovative insurance solutions while increasing operational health and improving compliance.
Property & casualty advisory services
Modern flood insurance program
Investment, advisory & trading services
Financial modeling & industrialization
Geographic rating insights
Premium comparison platform
Retirement & Benefits
Deliver on the promises of the past and create smart solutions for the future.
Pension administration & communication
Retirement benefits administration platform
Compensations & benefits
Benefit plan evaluation
Health & welfare benefits administration platform
Manage complex risks using data-driven insights, advanced approaches, and deep industry experience.
Auto policy underwriting
Software performance enhancement
Mortgage platform for investments & reinsurance
Solvency II reporting & compliance
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Data-driven insight. Deep expertise. Transformative innovation. Since 1947, Milliman has delivered intelligent solutions to improve health and financial security.
Asset/Liability Modeling & LDI
The market downturns of 2000-2002 and 2008 took a heavy financial toll on many pension plan sponsors and illustrated the importance of managing pension plan assets in the context of the pension liability.
With specialized expertise in both assets and liabilities, Milliman offers the most sophisticated asset-liability modeling in the industry. Our analysis quantifies the potential financial impact of the pension plan on the plan sponsor and is tailored to our clients' specific circumstances, liability characteristics, and financial objectives. Given our expertise in capital markets, actuarial science and simulation, we are more quantitative in our approach than many other firms in either the investment consulting or actuarial arenas.
ALM is a tool that shows pension plan sponsors the potential consequences of different investment strategies. Those consequences include the plan's future funded status and resulting contribution requirements.
ALM allows a plan sponsor to coordinate investments with plan liabilities in order to achieve desired financial goals. Those financial goals often involve finding the best combination of reduced risk and maximized investment return. Investment managers can then implement strategies that are projected to meet those financial goals.
LDI is an application of ALM to investment management. LDI emphasizes reducing the volatility of a plan's funded status and contribution requirements. For example, a common LDI strategy for corporate pension plans is to buy a portfolio of high-quality bonds with durations matching those of plan liabilities. This way, the sensitivity of the market value of assets to interest rate changes closely matches that of the liabilities. The investments and liabilities move in tandem, and the net funded status stays relatively consistent from year to year.
Public sector and multiemployer pension plans are funded and accounted for using long-term assumptions, so the interaction of interest rates with plan liabilities is indirect. However, LDI can also be applied to these sponsors by matching liabilities with appropriate assets. For example, as plans mature, sponsors can shift a greater portion of assets to fixed income products that will fund retirees’ benefits in a predictable manner.
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