DFA Capital Management Inc. (DFA), one of the leading providers of enterprise risk management solutions for insurers and financial service providers, announced today that Provinzial NordWest Holding AG, Germany's second largest public insurer, which offers life insurance as well as property and casualty insurance, has decided in favor of GEMS(TM), DFA's economic scenario generator.
Provinzial Holding AG generated premium income in 2007 of 2.9 billion through its insurance subsidiaries WestfAnlische Provinzial Versicherung AG, Provinzial Nord Brandkasse AG, Provinzial NordWest Lebensversicherung AG and Hamburger Feuerkasse Versicherungs-AG and manages assets of 20.3 billion within the group. Provinzial employs about 3,000 office employees and serves three million customers with nearly 10 million current contracts.
"For risk modeling under Solvency II, as well as calculating market consistent embedded value, we were searching for a flexible scenario generator that was compatible with our existing modeling instruments and software that we could use to generate so-called real world scenarios for risk modeling as well as risk-neutral scenarios for embedded value calculations,"
Dr. Ulrich LA 1/4xmann, CFO of the Provinzial NordWest Group, explained.
"We decided in favor of GEMS after evaluating capital market scenario generators from other providers. We established that, in comparison with models from other providers, GEMS distinguished itself through its more in-depth and comprehensive models and as a result of its greater flexibility. DFA's product was therefore the one best tailored to our needs,"
said Halil Bektas, head of group controlling at Provinzial NordWest Holding AG.
GEMS simulates the future conditions of the world economy that the modeled enterprise or product might have to go through. Thanks to highly modern technology, empirically validated, realistic behavior is achieved that, in turn, leads to more precise modeling scenarios with more realistic resulting events. In addition, it is possible to record the distribution as well as the dynamics of economic and financial variables that might have a critical influence on an enterprise. Users can gain a better overview of their risks through the integration of GEMS and the existing modeling software. It is possible, for example, to quantify the probability and scope of, and basic causes for, financial events. In this way, enterprises can determine with greater precision the risk capital that is necessary to secure their liabilities.