Actuarial Partners has been active in conventional insurance consulting since 1977 from pricing to valuation roles, feasibility studies to M&As.
We have been the Appointed or Signing Actuary for companies in Malaysia, Singapore, Brunei and the Middle East. Aside from the statutory role, we are also involved, among others, in the due diligence of merger & acquisition exercises (appraisal valuations), pricing and product development of Malaysia national products, in the development of Malaysia’s mortality tables, and have led research into Long Term Care (“LTC”) and the protection gap.
For many companies a feasibility study is the first step in the establishment of an insurance operation. Actuarial Partners can provide studies on the market potential for the company as well as an analysis of the risks.
Establishing / Restructuring Operations
When establishing or restructuring operations Actuarial Partners is able to provide assistance with:
- Company operating structure
- Product range/operations
- Selection of administration arrangements
- Necessary capital levels
- Financial modeling and projections
- Investment policy
- Fulfilment of regulatory requirements
- Assistance in the establishment of the IT system
Mergers & Acquisitions
Merger and acquisition work constitutes a significant part of our consulting business. We provide the following strategic advice and calculations:
- Financial investigation and actuarial valuation
- Potential sellers/purchasers identification and evaluation
- Brokering negotiations between parties
- Due diligence on financial as well as strategic and operational aspects
- Identifying synergies
- Company restructuring prior to and after the sale
- Independent opinion to regulators
- Identification of the factors affecting the deal price, with a view to maximising the value from the seller's point of view or assessing potential risks from the buyer's point of view
Actuarial Partners can assist in determining:
- Relevant industry benchmark
- Developing industry surveys to ascertain industry standards and the reinsurer’s position
- Analyzing the reasons for the insurer’s position in the industry
It is vital that insurers capture appropriate information to ensure awareness of trends and understand the profitability of all lines of business and subsets of the business. This information is then used in formulating business and marketing plans focusing on the business subsets which give the most value to the company. Actuarial Partners can assist in the development of efficient management information systems and analyze which variables should be kept in this system.
Actuarial Partners can provide detailed financial modeling which is essential for effective business planning. These models can assess the effects of new market entry on shareholder profit, or test the effects of varying bonus or dividend rates on company profitability.
The level and type of retakaful in place can have a large effect on profitability. We can assist in investigating the financial impact when varying retakaful arrangements and retention levels. This is performed using statistical modeling, and results in a probability distribution of profits across various scenarios.
Actuarial Partners can provide appraisal valuation, dynamic solvency testing and financial condition reporting utilizing a range of financial models. Our financial modeling team can also assist in the strategic running of the company, and our services include the following:
- Company profitability projections, both for the company as a whole under various scenarios as well as by business subsets.
- It is also used to determine the appropriateness of existing, new or proposed products
- Capital requirements projections under various scenarios. This can be used in assessing the cost of capital in order to give assurance to participants and maximize the return on capital to the operator.
Asset and Liability Modelling (ALM)
- Project invested assets and policy liability cash flows using deterministic or stochastic modeling. Projections are performed using different economic scenarios, risk level of assets, new business written and level of capital requirement. They are used to understand and quantify the level of investment risks due to mismatching between assets and liabilities.
- This analysis can also be used to assess the impact of falling sukuk (Islamic bonds) yields and volatile equity markets on benefits to the participant as well as managing investment risks by product redesign.
We offer advice and assistance to a company’s appointed actuary, are able to perform most or all actuarial work for companies with little or no actuarial staff, or can provide more of an auditing role for companies with an in-house qualified actuary. Our actuarial services include:
Statutory valuation and solvency calculation
Dynamic Solvency Testing (DST)
Financial Condition Reporting (FCR)
Risk Based Capital (RBC) Analysis
Incurred but Not Reported (IBNR) calculation
Embedded value calculation
Asset shares/ bonus strategy
Product development / pricing/ profit testing
Business planning / projections
Actuarial Peer Review
We also review the actuarial tasks and reports performed by the client’s in-house actuarial department or the company’s appointed actuary in discharging his or her responsibility, which may be a necessary regulatory requirement or as part of a regular audit process.
In a tariff driven market the need for premium rating may not be obvious. Considerations include:
Premium < Tariff
Company will be able to focus more on marketing strategies by knowing which line of business could be charged lower than tariff rate
Premium > Tariff
Business should be reviewed carefully for ways to bring the rates in line with experience
Risk Based Capital Framework
One of the goals of the Risk Based Capital (RBC) Framework is to evaluate the additional reserves and capital required to increase the level of certainty of meeting known and unknown obligations and identifying sources of risk and stress testing to determine an internal capital adequacy target. As part of our analysis, we carry out stochastic testing of the variability of various liabilities using Monte Carlo simulations and fitting to various distributions. This testing can go beyond simply calculating the capital required to determine how to minimize the capital required for a required level of risk.
Actuarial Partners can assist in all aspects of the product development cycle, including:
- Identification and research of the target market
- Policy design and pricing with sensitivity testing
- Competitive analysis
- Business plan projection
- Asset share and cash flow analysis
- Policy illustration
- Management of risk including the use of reinsurance and other financial instruments
- Analysis of capital required
- Measurement of return to policyholders and shareholders
- Analysis of existing experience for mortality, lapsation, investment and expenses
Product Pricing: Medical and Health Insurance
Actuarial Partners is an industry leader in pricing medical and health insurance products in Malaysia. We can also assist in specific medical product development and pricing, and subsequently track results.