Global reinsurance intermediary and capital advisor Aon Benfield has launched version 6 of ReMetrica, its financial analysis tool, which reduces Solvency II model sizes by up to 95% to cut complexity and allow more accurate credit risk modelling for insurers in an uncertain economic environment.
The new version features major updates resulting in enhanced functionality for actuaries to make building and running models easier and faster, including:
- Super components that reduce the size of the model to 5% in some cases, reducing the complexity of modelling.
- High performance computing (HPC) support for larger models, enabling faster run times with sophisticated job management facilities.
Aon Benfield said that ReMetrica v6 enables a more accurate assessment of insurers’ credit risk. Traditionally, credit risk has been modelled on the likelihood of counterparties as a whole defaulting. However, with the growing need to better grasp counterparty risk due to today’s unsettled global economy and regulatory pressures, ReMetrica v6 assigns a rating to each counterparty, which can evolve stochastically. This in turn can help companies adapt their risk mitigation strategies.
“Capital models are becoming increasingly large in scale as insurers respond to regulatory and rating agency pressures, coupled with their own internal pressures to manage risk according to their appetite and tolerance levels,” said Paul Maitland, international head of ReMetrica at Aon Benfield Analytics. “Left unchecked, capital models may become overly complex. We continue to refine ReMetrica to meet an increasing level of stakeholder demand without increasing the complexity of modelling in ReMetrica. In short, these improvements are designed to make the work of the modellers faster and more efficient, but still maintain the accuracy and transparency of results.”
ReMetrica v6 builds upon recent Solvency II-focused enhancements to help insurers and reinsurers meet the proposed regulatory requirements, including the own risk and solvency assessment (ORSA), and to enable more effective reporting for the Lloyd’s market.
However, a London summit on the industry’s introduction of the technology cautions that testing and acceptance are still at an early stage and firms should proceed with caution.
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