Insurance & Financial Services

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	Insurance & Financial Services
	Life insurance
Financial reporting
Mergers and acquisitions
Risk and value modelling and management
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The management of a life insurance company involves the co-ordination of specialist activities ranging from underwriting and marketing to systems, finance and investment policy. In an increasingly sophisticated environment it is more important than ever not to lose sight of the company’s overall business strategy and management of the core business.

Good management information will be essential to any company hoping to compete successfully in the life insurance, pensions and savings market. A company will need to be able to assess accurately the risk and profitability of every part of its business and to react quickly to changes. It is essential that management information is incorporated effectively within a company’s management, strategic and business planning process.

Not only can strong compliance with the regulations reduce the risks of adverse publicity, it can provide a competitive advantage. With an increasingly litigious society, risk management is more important than ever before. Regulators, analysts and sales channels are evolving, with efficiently controlled companies being rewarded with lower capital requirements and higher volumes of sales.

Watson Wyatt provides actuarial support to many companies, from traditional insurers to virtual insurers, as well as companies particularly concerned about maximising cost efficiency. Whether as a short-term facility (if key staff depart unexpectedly or if a special project requires additional resource or expertise) or as a longer-term solution to provide a high quality actuarial service, Watson Wyatt is able to provide a client focused and experienced team, capable of delivering results in a cost-effective manner.

Actuarial support

Watson Wyatt has a wide range of experienced consultants and is therefore able to provide assistance with all the key actuarial tasks within a life insurance company including:

• statutory valuation/realistic valuation

• regulatory compliance

• profit reporting (achieved profits/embedded value/US GAAP/IAS)

• asset shares/bonus strategy

• product development/pricing/profit testing

• strategy/business planning/projections

• asset liability modelling and investment strategy

• financial condition reports

• policy projections

• designing management information systems.

Strategic planning

A reliable flow of accurate and up-to-date information is essential to the strategic planning process.

Watson Wyatt can help you make the right decisions by:

• reviewing existing strategies and objectives

• assessing domestic and international opportunities for expansion into new areas

• assisting in the development of a participative business planning approach within your organisation, both for strategic and operational purposes

• advising on the establishment of effective reporting and monitoring systems.

Capital management

Managing capital efficiency is critical to the successful management of a life insurer.

Watson Wyatt can assist by:

• projecting capital requirements in different scenarios or stochastically

• assessing the cost of capital within a sound economic framework

• identifying risk-based capital requirements

• ensuring compliance with the numerous complex regulations

• analysing the impact of securitisation, reinsurance financing and other capital restructuring proposals.

In particular we are able to provide an independent review of any proposals suggested to clients by investment banks and reinsurers.

Management information systems

Managing a life insurance company is becoming increasingly complex in a rapidly changing and extremely competitive marketplace. It is vital that senior management receives reliable, concise and up-to-date information to enable it to allow informed and timely decisions.

Watson Wyatt can help by:

• reviewing current information requirements and identifying any gaps or inconsistencies in existing information systems

• designing management information systems to meet your specific needs.

Analysis and management of expenses

The analysis and management of expenses has always been of importance in managing profitability. Expense analysis also provides the basis for assumptions used in product pricing and financial reporting. The importance of expense analysis has increased as companies face competition from new distribution channels.

Watson Wyatt is able to:

• provide an independent assessment of a company’s procedures for the reporting, analysis and control of expenses

• construct computer models to determine expected costs on a range of production and persistency assumptions

• develop models to project expenses at a corporate level

• develop methods for assessing the overall progress of the company.

Appointed Actuary

Watson Wyatt has market-leading experience of acting as Appointed Actuary, either working with the in-house actuarial department or using a team of Watson Wyatt consultants. Watson Wyatt also offers a peer review facility to in-house Appointed Actuaries to provide quality assurance and to review compliance with professional guidance.

Financial reporting

The importance of carrying out statutory valuations and reporting profits in a timely and accurate manner has led many organisations to reconsider existing processes.

Every company now needs to report results in very short timescales and very often the results need to be presented on different bases for solvency, accounting and internal management purposes.

Watson Wyatt is able to assist the process in many different ways and we can work flexibly to meet a company’s specific requirements. We can also assist with the communication of results with a view to identifying clearly the key issues and drivers underlying the business. The need to report profits quickly places considerable pressure on both resources and processes. Watson Wyatt is able to use its experience and knowledge to help clients:

• report results quickly

• ensure early results are produced at an acceptable level of accuracy

• streamline processes and eliminate weaknesses

• validate methodology and assumptions or perform a full actuarial audit and sign off.

When companies need to explore new methods of measuring profit we are able to advise on all the different methodologies and assist with implementation.

Statutory valuation

While many organisations find it most efficient to carry out these processes in-house, Watson Wyatt has considerable experience of assisting in the process to whatever extent required. In practice the assistance might consist of:

• full outsourcing (perhaps where a new insurance company has little or no actuarial resource)

• close collaboration with an in-house actuarial team (providing guidance and quality assurance)

• peer review of in-house processes or guidance on technical complexities.

With the volume of guidance and ever changing regulation, Watson Wyatt is able to provide a service which reviews compliance and assesses weaknesses in the current process.

Financial condition

As well as valuations at fixed points in time, many organisations wish to gain a better understanding of how statutory results and reported profits are likely to develop. A financial condition report provides valuable information about the potential risks facing the business and allows management to consider mitigating strategies.