Aon Benfield, a reinsurance intermediary and capital advisor, has launched version 6 of ReMetrica, its financial analysis tool that seeks to reduce Solvency II model sizes by up to 95% to cut complexity and allow more accurate credit risk modelling for insurers.
Aon Benfield is hopeful the updated tool will find users in the present uncertain economic environment and as the Solvency II capital adequacy rules for insurers begin to bite.
The new version 6 tool features major updates resulting in enhanced functionality for actuaries to make building and running models easier and faster, says the vendor, with particular emphasis on:
• 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.
According to Aon Benfield 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.”