IRIS AG and Clal Insurance extend the RiskPro financial analysis platform for ALM

In a bid to bring ALM to the insurance sector, IRIS AG and Clal Insurance will extend the application of the RiskPro financial analysis platform for use in an insurance environment

Zürich, June 18, 2002 – IRIS integrated risk management AG and Clal Insurance of Israel have launched a pilot project in which the firms will explore the application of IRIS’s integrated financial analysis platform, RiskPro™, in an insurance environment. Beyond this exploratory phase, it is anticipated that Clal will license and employ RiskPro™ for the measurement and control of asset risks while the two firms begin collaboration on the adaptation of RiskPro™ for the management of insurance liabilities. Significant for two reasons, this project represents a bid by IRIS AG and Clal Insurance to bring ALM principles to the insurance sector, and it serves as the kick-off point for an IRIS’s plans to adapt RiskPro™ for sectors outside of it’s traditional user segment of banking.

"We believe we are one of the first integrated financial analysis software vendors to attempt a cross-over from the banking to the insurance sector. If successful, we will be able to provide a single integrated platform for simultaneous analysis of assets and liabilities," said Dr. Philipp Busato, IRIS AG Project Manager for the IRIS/Clal initiative.

"The insurance sector will profit tremendously from the ALM applications. It will incorporate the financial and the proper insurance effects of risks on a highly consistent level," said Dr. Willi Brammertz, Managing Director at IRIS AG.

One of Israel two largest insurance group, Clal Insurance was searching for a package of tools for Exposure Analysis and VaR measurement. According to Tali Michaud, Corporate Risk Manager, RiskPro was selected from the field of providers because of their experience with the Israeli market, the versatility of the reports and additional features that can possibly be extended to the liabilities side of an Insurer’s balance sheet.

The project unfolds in four phases. In the first phase, RiskPro has been installed for a three-month exploratory period, through the assistance of Hedge-Tech Financial Engineering, a third-party consultant who provides data analysis, interfaces mapping/development, customized software enhancements, and modeling support. In the second phase, this will be completed and brought to regular production. In the third phase, IRIS and Clal will develop an integrated financial analysis tool for the insurance industry using RiskPro as the foundation. In the final phase, IRIS, together with its partners, will market and distribute the adapted platform.

"We feel that RiskPro is uniquely suited for this cross-over venture," remarked Dr. Juerg B. Winter, Managing Director at IRIS AG, "because the system is based upon an open, flexible financial contract model which essentially distills data down into it’s fundamental components – cash flow, value, and income – and applies core analytical methods such as VaR, Exposure Analysis, or Dynamic Simulation to this information. It does not matter whether the system is dealing with financial contracts or insurance contracts – the process remains the same. The adaptation of the system for the insurance market will simply be a matter of introducing a new set of risk factors and incorporating new categories of contracts."

With two of Israel’s largest banking groups as current customers (Bank Leumi le-Israel and Israel Discount Bank Ltd) and now with the addition of Clal Insurance, IRIS AG is extending its market share in the Israeli market for integrated financial analysis systems.

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