Total control: imagine the possibilities

While re/insurers have many software applications to choose from, very few have been developed by experts in their specific domain: the insurance industry. Anders Ericson, chief executive of ActERM, tells PCI Today this is what sets his products apart from the competition.

Actuarial & ERM Solutions (ActERM), a US-based technology startup, was formed in 2014 by Anders Ericson, an experienced insurance professional, with the aim of offering high performance analytical software applications to the P&C insurance and reinsurance industry. Ericson spent nearly three decades working as a senior actuary in the P&C insurance and reinsurance industry for companies including Aon Re (now Aon Benfield) and RMS where he built systems and worked on automating analytical processes.

The company’s main offering is CAPx, a product that combines financial planning and capital management in one system.

“CAPx provides a framework for the development and monitoring of a company’s financial plan and high resolution risk modelling to determine required income, or allocated cost of capital. Comparing projected income with required income at the business segment level is essential to identify superior strategies,” Ericson says.

He explains that CAPx has a clear separation between data, assumptions and algorithms, which vastly simplifies the process of updating and auditing.

“New projections are automatically generated when new data are loaded or assumptions are revised. As assumptions are stored in a database, reports can easily be generated to audit how assumptions have changed over time,” he says.

“This gives companies the ability to carefully manage how their view, as represented by the underlying assumptions, evolves over time.”

ActERM is launching a CAPx beta program at PCI. The company is seeking clients to join ActERM as beta partners, who will get early access to the system, lock in a perpetual discount, and influence future development.

Appropriate technologies

A major problem with high resolution insurance projections and simulations is the high volumes of data that have to be processed on multiple assumption sets, and the corresponding large volume of results to be stored. Traditional modelling platforms based on Excel and relational databases do not handle this well, but a key aspect of CAPx is its use of high-performance technologies both for the core calculations engines and result storage. ActERM has engaged experienced technology experts to undertake this development and set the program apart in the market.

Ericson estimates that re/insurers currently spend up to three months each year managing ineffective Excel spreadsheets in their annual planning and quarterly monitoring processes. On top of this, additional time is consumed replicating the plan in separate capital modelling software to allocate capital.

The effort and lack of control of these processes are likely to significantly impair companies’ ability to identify optimal portfolio and reinsurance strategies.

“This is a platform that takes financial planning out of Excel and puts it into proven enterprise technologies. CAPx can even run in the cloud—it’s capable of handling any size company,” he says.

“One of the things you don’t have with Excel is control,” he says. “CAPx enables much greater control than companies have ever experienced before. Our slogan is ‘CAPx: total control—imagine the possibilities’. It’s really about control and flexibility.”

Domain-driven design

Ericson notes that CAPx is designed by experts in the insurance industry. He refers to this as domain-driven design.

“There’s a lack globally of good products in difficult domains because it’s very hard for generic software companies to develop products for those domains. To do it successfully, you need a domain expert with a product vision and a software architect with enough understanding of the domain to fully anticipate its demands when designing the core system architecture,” he explains.

He says Steve Jobs was the ultimate product visionary and he had total control. “That worked well for Apple but when you get into a financial planning and capital management platform for the P&C insurance industry you need product managers and system architects to also be subject matter experts in the domain. That is what I mean by domain-driven design.”

He reiterates that the system’s unique selling feature is that it’s an enterprise-class analytical platform that enables companies to take control of things such as the planning and capital management processes.

He claims that CAPx will ultimately be deployed in the cloud to take advantage of distributed processing to perform high resolution projections and risk simulations for the largest global companies.

“For the beta program we are launching at PCI the ideal book of business for high resolution modelling would be from $50 million and upward in premium volume. This could either be an entire company or a division of a company,” he says.

Anders Ericson is the chief executive and founder of ActERM. He can be contacted at: aericson@acterm.com