DFA signs insurance firm Aegis to risk management software
08 January 2008 | 1868 views | 0
Source: DFA Capital Management
DFA Capital Management (DFA), the leading provider of Enterprise Risk Management solutions to the insurance industry, announced today that Associated Electric & Gas Insurance Services Limited (AEGIS), a non-assessable mutual insurance company, has agreed to purchase its modeling and analysis software, ADVISE 4.0., as well as its economic scenario generator, GEMS.
AEGIS will be using ADVISE (Advanced Decision & Value Simulation Engine) and GEMS for asset liability management, reinsurance acquisition alternatives and underwriting profitability analysis. The tools will also be used to stress test the Company's capital adequacy under a broader range of scenarios than available in its current modeling alternatives. Additionally, ADVISE will be used for multi-currency and multi-line of business modeling, while GEMS will allow the Company to better model the global economic environment in which it operates.
"We are extremely pleased to have selected DFA," said John J. Denman Jr., Chief Financial Officer of AEGIS. "Their advanced technology is unique in its ability to model both assets and liabilities and we found the caliber of economic modeling that is provided through GEMS is unparalleled. Their solution will enable us to more thoroughly analyze our various lines of business and simulate numerous financial risk scenarios that could have a potential impact on them."
Denman noted that prior to working with DFA, AEGIS used an internal risk management model, but that as the business evolved the company realized the need for more complex capabilities. "We believe DFA's tools will play a key role in helping us more easily identify better business opportunities by simulating in a very realistic and detailed manner the numerous economic and business dynamics within our organization," he said.
A New Level of Modeling
With ADVISE 4.0, AEGIS can now create economic scenarios that contain insurance premium and loss models, test reinsurance alternatives and identify optimal investment allocations in any currency mixture for the economies available within GEMS. "The result is the ability to more accurately simulate foreign operations and their risks by automatically generating foreign exchange conversions and measuring their effects," said Lisa Cash, EVP, Sales and Marketing at DFA Capital Management Inc.
She added that the greater realism in modeling complex business structures will allow AEGIS to more accurately allocate its capital, and help to more closely align planning, financial reporting and performance management systems.
"We're excited to have the opportunity to work with AEGIS," said Cash. "They're in a great position and we're confident we can help them build a unique and competitive advantage."