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There is increasing focus on the modelling of risk within non-life insurance companies. This process has been accelerated in many countries by regulatory pressure. For example, in the UK the FSA is requiring all non-life insurers to undertake an internal capital assessment. Watson Wyatt Simulum® delivers a practical solution to a complicated problem, based on 15 years of practical application of risk modelling techniques.

Watson Wyatt Simulum® combines the asset, liability and operational risks a non-life company faces, to produce a possible future financial position for the company. Based on a large number of such future possibilities the risks can be quantified and analysed.

Watson Wyatt Simulum® has been used for:

• capital adequacy



• investment strategy



• reinsurance strategy



• allocation of capital



• strategy and business planning



• valuing companies for M&A purposes.

A specially tailored version of Watson Wyatt Simulum® has been used in the calibration of the UK's FSA enhanced capital requirements which UK companies will be required to satisfy.

Watson Wyatt Simulum® offers:

• a Microsoft^® Excel based solution for Internal Capital Assessment



• flexibility to incorporate any feature of a company



• transparency to see how key assumptions affect the model



• fast simulation routines to produce complicated results in realistic times



• clear graphical output created with a few keystrokes



• a practical solution owned by you.

Watson Wyatt Simulum® is built in and runs under Microsoft^® Excel:

• Excel is a system used by and understood by people worldwide



• Excel can easily cope with complicated calculations



• Excel can incorporate user-defined functions for the expert user



• only a limited knowledge of Excel is required to use Simulum®.

Watson Wyatt Simulum® includes easy to use menus to enable the construction of a model of your company. Typically a simple, but robust, model based on publicly available information can be built within a day and this can then be further tailored over time to build a more comprehensive picture of the company.

Input is made simple through easily understood assumption pages:

By using menus such as the one below…

… powerful graphical results are obtained. For example a funnel plot shows the future probability of insolvency:

A scatter plot can be used to visualise correlations between two variables:

A box-whisker plot can be used to graphically represent a comparison between different modelling scenarios:

With the results exported to Excel, scenarios within Simulum® can also be compared simply. For example, the risk/reward trade-off for investing increasing percentages of total assets in equities might be represented as follows:

Watson Wyatt Simulum® can easily be tailored for the particular circumstances of your company and thus Watson Wyatt Simulum® is "your solution".

To organise a demonstration of Watson Wyatt Simulum®, either in person or over the Internet, or to request further details, please contact David Slater or Ryan Warren in the UK on +44 (0) 1737 241144 or Claudine Modlin in the US on +1 (805) 496-4431.

Alternatively send an email to simulum@watsonwyatt.com