Taylor Fry

 

Actuarial

Capital Modelling & Management

In today’s complex product, legislative, financial, legal and investment climate, good capital management is increasingly important. Effective capital modelling helps insurers and accident compensation schemes manage capital to address the challenges head on.

At Taylor Fry, we have a track record of delivering capital models that work. Our technical expertise and thorough understanding of the product and business environment enable us to build customised models for our clients that help them to determine optimum capital management strategies.

A model that answers your questions

Experience has taught us that the key to good capital management models lies in knowing which questions the model needs to answer. Irrespective of what it is called, good modelling answers the questions that are relevant to each individual business’ circumstances and objectives. Questions such as:

  • What are the long-term implications of trends in the liabilities?
  • How can we best manage residual risk?  Reinsurance? Higher Capital Levels?
  • Is the return we are expecting commensurate with the risks we are managing?
  • What is our optimal investment strategy?
  • How soon will we return to full-funding, and what are the key drivers to the time it will take?
  • How can we best manage our dividend strategy?

Taylor Fry has developed a unique, question-driven model that gives you insight into your business drivers so you can maximise the performance and security of your business. Once we understand what you need to know, we build you a customised model that takes your main business drivers and uses them to accurately project business performance in ways that answer your questions.

Case study: accident compensation scheme

An Australian state accident compensation scheme wished to explore alternative dividend payment policies. The scheme paid a dividend to the State Government and wanted to determine the optimum dividend strategy, given its liabilities. Taylor Fry built a model that projected premiums, claims, expenses and investment income to produce financial statements under a variety of relevant scenarios and simulations.

As a result of thoroughly test-driving a range of alternative strategies, our client decided to change the dividend policy.  The Taylor Fry model enabled the scheme to provide a clear rationale for the new policy to the State Government, and demonstrate that the new strategy:

  • resulted in a smoother cash flow, better reflecting the results of the scheme, and
  • allowed an increased investment in equities, which increased the overall long-term dividends to the State Government.

Why Taylor Fry models work

Taylor Fry understands that good capital modelling depends on fitting the model to the business, rather than the business to the model. Our rigorous process involves working closely with our clients to define the key questions the model needs to answer and then developing customised solutions. Our extensive technical expertise in modelling, statistical analysis and software development allows us to build practical, customised models. Plus we have the knowledge and insight into insurance and accident compensation to translate the results into real-life management decisions that work for our clients.

CONTACT US TODAY

Kevin Gomes

Kevin.Gomes@taylorfry.com.au

(02) 9249 2918