Principles-Based Reserving

With VM-21 already live and Principles-Based Reserving (PBR) standards taking effect on January 1, 2017, the world of valuations and projections will undergo a major transformation. The challenge is that traditional, separate systems for valuation and projection are not equipped to both perform ALM projections and meet VM-20 calculation, assumption and reporting requirements.

Explore the power of a single, modern platform that provides the right combination of governance, flexibility and speed that PBR and VM-20 standards will demand. Out of the box, Prophet’s standard libraries provide companies with everything they need to calculate VM-20 or VM-21.

Single-run, single-click

Even though VM-20 is comprised of multiple parts (a net-premium reserve, deterministic reserve and stochastic reserve), Prophet saves you time and effort by letting you calculate all three parts at once with one button click.

Estimate future reserves

Prophet helps you accurately price products, forecast earnings and understand capital requirements by projecting future VM-20 and VM-21reserves. To accomplish this, Prophet calls a model from within another model, enabling stochastic-on-stochastic modeling and other advanced modeling techniques.

Learn more about our Nested Structures functionality. 

Reduce runtime

When projecting future VM-20 reserves, Prophet reduces runtime by providing you with the ability to call a grouping algorithm “on the fly” within the model. This allows you to use seriatim data in the outer run and NPR calculation, while using grouped data for calculating the deterministic and scenario reserves.

Meet allocation requirements

Prophet performs the allocation of excess reserves, either deterministic or stochastic, back to the individual policy level, as required by VM-20.

Analyze reserves

Unlike traditional statutory reserving, PBR can at times be a stochastic ALM projection – resulting in a greater amount of data and more reliance on business intelligence tools to gain an accurate understanding of how and why reserves are moving through time. Prophet provides database tools to store these results and perform the necessary analysis.

Learn more about the Prophet Results Database and our award-winning Data Management Platform.

Conduct experience analysis

VM-20 assumptions rely heavily on a company’s own experience. Prophet provides an integrated experience analysis tool, called Glean, for creating assumptions as well as an assumptions management tool for viewing, editing and updating those assumptions.

Learn more about our integrated experience analysis tool, Glean, and Prophet Assumptions Manager.