With-profits models lack sophistication, survey shows

More than half of insurers do not project risk appetite and resulting future management actions, which could impact their balance sheets

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UK insurers need to improve their internal models to accurately capture the impact of management actions on their with-profits funds, says consultancy Towers Watson.

In a survey of 24 insurers, managing a total of 48 with-profits funds, Towers Watson found that 58% did not allow for a modelled projection of risk appetite metrics and resulting management actions in their internal models because of technical limitations. Only 25% projected these at all using stochastic or proxy techniques. The

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