Numerix and Insurance Risk Consultant Risk & Actuary Aim to Better Manage Insurance Customers’ Variable Annuity Portfolios in Korea amid Regulatory Change
Numerix, the leading provider of cross-asset analytics for derivatives valuations and risk management today announces a new partnership with Risk & Actuary. A consulting company based Seoul, South Korea, R&A focuses on providing variable annuity advisory, actuarial and hedging services, advanced risk management and M&A support to insurers throughout the region.
Addressing today’s VA Market in Korea
The stock market in Korea (KOSPI) has seen significant growth over the last several years. As many variable annuity insurance premium revenues are tied to the KOSPI, premium revenue has also increased. In fact the total of fund assets of variable insurance in Korea topped $85.2 billion as of July 2015. Regulations of guarantee reserving in Korea have also changed dramatically since 2011. With the introduction of regulation, the obligation of guarantee reserve calculation using a stochastic approach with real-world modeling dynamics has become critically important. Further stressed by the IFRS/Fair valuations requirement more sophisticated hedging tools are needed.
“Converting to fair valuation is a complex task. As some small to medium sized insurance companies are inclined to take the path of outsourcing to meet the 2018 implementation deadline where consulting services would best serve their needs, larger insurers are expected to start well before 2018 opting for complete implementation of the fair valuation by an in-house system,” said HyungKeun Kim, CEO at Risk & Actuary. “Through our partnership with Numerix we not only see a strong opportunity for reselling Numerix’s insurance solutions in to the marketplace but also significant opportunities for R&A consulting and implementation services.”
Through this multifaceted partnership both R&A and Numerix will leverage their respective strengths in the insurance and actuarial space to help serve the needs of the growing variable annuity market in Korea. R&A will leverage its deep actuarial expertise and local relationships with Korean insurers to introduce Leading Hedge, Numerix’s production platform for end-to-end risk management and the hedging of life and annuity products, as well as its Economic Scenario Generator. R&A’s actuarial team will work in close collaboration with customers to implement Numerix insurance solutions, in addition to providing variable annuity hedging services for those customers’ that wish to outsource these services.
“As the obligation of guarantee reserve calculation leveraging a stochastic approach drives need for market-consistent pricing and hedging in Korea, we see many applications for our partnership with R&A,” said Steve O’Hanlon, CEO at Numerix. “Providing a risk neutral or real world stochastic modeling framework, Numerix Leading Hedge can be used for capital calculations, product pricing and ongoing valuations, trading and hedging. And its industry leading simulation techniques along with optimized compilations of client’s business logic lead to dramatically faster run times. We’re excited to begin our work with the insurance experts at R&A and look forward to serving this growing segment of the market in Korea.”