Life Insurance

  • The life insurers have been continuously striving to keep pace with the industry dynamics due to several changes on the economic, social, regulatory, legal and political frontiers. The volatile capital markets, increased longevity, unhealthy sales practices, changes in the distribution channel, lower persistency, compliance with the regulatory guidelines, varying socio-economic & demographic trends, apprehensive movement of the macro-economic factors are some of the many areas concerning the life insurers across the world. The insurers are coping up with these augmentative challenges by diversifying their portfolio and offering new innovative & competitive products focusing essentially on customer centricity & protection, transparency, improved sales practices & long term focus regarding stability in terms of guarantees as well as sufficient upside potential. Having a detailed understanding of the variousissues, our actuaries can provide comprehensive services in assisting and advising the insurers on product design, marketability, underwriting practices, mergers and acquisitions, statutory reserving, capital modelling and solvency position.

    Our actuarial services specialise in providing business transforming solutions and optimising strategies to create value for shareholders and enable them to take well informed decisions. Aligning with the supervisory and regulatory framework, we believe in adopting and implementing integrated risk management processes to deliver sustainability, long term profitability to all the stakeholders. With the support of our actuaries possessing more than 25 years of experience and technical expertise, our team is well established to cater to clients in different geographical locations. To gain further advantage of our core competencies, we model actuarial calculations using “Prophet”, an actuarial software which enables business projections, reserving and asset liability modelling.

    Our actuarial services comprise of:

    The life insurance companies are required to perform statutory valuations to demonstrate their solvency position to its regulators. Different laws and regulations apply to different geographical locations. Depending on the jurisdiction of practice, every insurer is mandated to comply with the standards stipulated by the supervisory authorities. Our actuaries provide certification of the statutory reserves & solvency margin. The actuarial valuations help to propose recommendations on capital requirements, bonus declaration, transfers to shareholders and retention of surplus. We also perform Analysis of Surplus to gain a deeper insight into various components of surplus like mortality, investments, expenses, new business and withdrawal to scrutinize and address every constituent and develop responsive treatments for each one of them respectively.

    The life insurers are gradually progressing towards risk based approach from the traditional practices. Examining the overall business operations, our actuaries help in identifying and quantifying the risks that the organisation is exposed to, and engage in assessing the minimum amount of capital required for the reporting entity to meet its competitive objectives. The RBC Valuations help to assist our clients in gaining a deeper understanding of the capital requirements, reinstatement of reinsurance arrangements/treaties, and establishment of arisk management policy and to consider mergers and acquisitions.

    Our actuaries support the client in designing marketable, competitive and consumer centric products keeping in view the socio-economic and demographic trends of the region. Addressing the underwriting practices, interest yields and investment opportunities, we succour our clients in premium pricing and product designing to attain strategic and competitive advantage. We duly advice our client on product viability, business mix to ensure profitability and sustainability in the long run.

    The asset and liability cash flows projections are carried out to ascertain whether the asset cash flows would be adequate to meet the liability outgoes in terms of timing and quantum, and tested for Portfolio Immunisation using Duration and Convexity matching to evaluate the interest rate risk. In order to address other types of risks such as market risk, credit risk and liquidity risk, the asset and liability cash-flows are evaluated under a range of different scenarios. This enables to check the resilience of the portfolio and the solvency positioning. In case of a mismatch, our actuaries provide guidance regarding alternative investment strategies. Keeping abreast of the investment guidelines & legislative regulations regarding the asset admissibility, we advocate our clients in seeking investment opportunities based on asset allocations, guide them in decisions regarding asset management and establishing reinsurance arrangements. ALM enables the client to gain a perspective into reinvestment strategy and restructuring of asset and liability portfolios.

    According to IFRS 4 and IASP 6, the liability adequacy test is intended to help ensure that the liabilities calculated using existing accounting policies are not understated and that related amounts recognized as assets (such as deferred acquisition costs and intangible assets) are not overstated. The test is based on comparing the assets and liabilities determined under IAS 37 or existing accounting policies with the value of current estimates of future cash flows. In short, it is the impairment test for insurance entities’ financial reporting. Any deficiency needs to be recognized in the statement of profit or loss, and the insurer must decrease the carrying amount of the related deferred acquisition costs or intangible assets or increase the carrying amount of the insurance liabilities.

    Embedded value is the present value of the future shareholders profit in respect of the existing business of a company, including the release of shareholder-owned net assets. It is a financial measurement basis enabling the insurers to recognise the profitability from in force business, assess the return on capital with performance measurement and influence strategic decisions regarding the capital allocation. Embedded Value calculations are carried out by insurers for internal management purpose to assess the shareholder value or for publishing it in the financial statements, as mandated under certain legislative bodies, leading to improved transparency to other stakeholders and consistency in comparing financial performance of insurers. Possessing actuarial competencies and knowledge, we can assist our clients in determining the purchase price of the stock during IPO/Public Listing and support them to determine the appraisal value while pursuing mergers or acquisitions.

    As IRDA guidelines in India, a peer review needs to be conducted by an external actuary to corroborate the statutory valuation of policy liabilities certified by the Appointed Actuary is in conformity with the IRDA Regulations,2000(Assets, Liabilities & Solvency Margin of Insurers). We offer peer review services that covers all relevant and significant aspects of the actuarial work relating to the annual statutory actuarial valuation, including data collection and verification, selection of assumptions, selection of analytical methods, calculations, results and conclusions, in line with APS 4, issued by the Institute of Actuaries of India.

    The purpose of the Committee is to provide independent oversight and challenge to the Board in relation to the management of the With-Profits business, to ensure With-Profits policyholders are treated fairly and to ensure that the interests of With-Profits policyholders are fully considered in the insurer’s strategic decision making according to GN 6 & IRDA guidelines.

    Majority of the actuarial teams use their own in-house actuarial software or develop their own models and processes to evaluate the financial results. We offer a range of services in auditing and reviewing these models, techniques and practices to deliver the best solution. Understanding the financial implications of the results and practical applications of the techniques, we can assist in thoroughly validating and reviewing internal systems. We understand that the process would not only lead to increased accuracy in the output but also facilitates in identifying the flaws and loopholes and can enable the insurer to take corrective actions. The audit and review helps in increasing transparency and instilling invigorating confidence in the stakeholders.

    • We help our clients in recognising the strengths, weaknesses, opportunities & threats to the business thorough SWOT analysis. Fathoming the possible threats, we can support our clients in seeking lucrative opportunities to maximize the profitability and growth.
    • We offer actuarial support and services to set up the products on policy administration system.