We believe that large clients, brokers and actuarial firms should be using all the data and modelling tools available to them, obtaining a far better insight into the risks and rewards of alternative risk-financing strategies.

We have many years’ experience of applying a wide range of actuarial modelling techniques to help our clients make better decisions about their programme structures and risk financing. We source the latest information on exposures, premiums and losses from a wide variety of market and industry databases, which we use to complement our clients’ own data.

Our actuarial support specialists work right alongside our placing team, helping them to design better insurance programmes for you, at fair prices. They also stay in contact with you, feeding you regular intelligence and always available for a consultation.

Making actuarial modelling accessible

We don’t believe that statistics and actuarial techniques should be a ‘black box’ which is hidden from our clients. Advances in data, actuarial theory and risk-modelling software (such as @Risk, now used as standard on many MBA courses) mean that actuarial modelling can be made accessible to a far wider audience, including risk managers as well as underwriters. Modelling techniques can now support clients very effectively in real time, informing the annual insurance renewal as well as more strategic medium- to long-term risk-financing and risk-transfer options.

Fast, low-cost access to complex models

Complex risk models can be developed quickly, and at a relatively low cost, by an experienced practitioner – with the flexibility to cope with even the most complicated programme structures. Fully functional risk models can now be developed which will generate a full set of financial projections, rendering scenario-based analysis somewhat outdated. These can reflect assumptions on:

  • future premium levels
  • reinsurance costs
  • loss models (gross and net of reinsurance)
  • dynamic assumptions on investment income and future cash flows.

This type of modelling can offer a more detailed and probabilistic understanding of capital adequacy and recapitalisation risk over a 3-5 year period, given various levels of start-up capital (increasingly relevant for captives operating under Solvency II.)

Helping you make better decisions

Our actuarial support services can help large clients to optimise their decision-making on:

  • Loss-reserving support – calculating ‘incurred but not reported’ (IBNR) and future discounted cash-flows. This type of analysis is crucial in establishing the benefits of loss-portfolio transfer or commutation options.
  • Pricing support – developing appropriate distributions for loss frequency/loss severity to help forecast retained/insured losses under alternative programme-design structures.
  • Capital modelling – using dynamic financial analysis tools to build statistical models which can estimate capital at risk, as now required under Solvency II or other risk-based capital regimes (see our captive consultancy page).
  • Reinsurance modelling – financial and statistical analysis of alternative structures or reinsurance products (see risk financing & captive solutions)

Actuarial modelling and captive insurers

We have a strong track record of innovation in actuarial support for clients looking to establish captives, optimise the role of existing captives, or test the efficiency of captive solutions against other risk-financing techniques. We’ve used our modelling techniques to develop optimal reinsurance structures for both single-parent captives (including setting out clear policy on target capitalisation levels and future dividends) and group captives/market facilities. Our modelling has reflected the use of traditional excess-of-loss or quota-share reinsurance structures, as well as non-traditional risk transfer products such as multi-line/multi-year protection to reduce the volatility in retained losses.

“Alesco demonstrated a clear commitment to captive insurance companies and, in particular, its focus on utilising data to its maximum potential. The submissions showed a deep understanding of Solvency II and how thorough modelling can mitigate its impact and reassure regulators over capital adequacy.”

2016 European Captive Service Awards

Energy and OIL

Energy insurance has been at the forefront of industry mutual capacity, for example Oil Insurance Limited (OIL) in Bermuda. This is based on an analytical, formula-based approach to underwriting which involves buyers locking in to a rolling 5-year share of pool losses. We’ve developed a very detailed understanding of the OIL Rating and Premium Plan, and can project the impact on the pool of wider industry losses and changes in membership. Find out more about our OIL advisory support services.

Please get in touch

Talk to us about how you can make informed decisions with our actuarial modelling services. Our key contacts are listed below.

View our glossary of insurance terms

Actuarial Support Key Contacts