Fentics: Turbocharging insurance risk modelling
Lukas Ziewer, senior adviser at Fentics, discusses how the insurance risk modelling software provider delivers unmatched ease and efficiency for insurers. The platform can also be configured to any reporting requirement and ensures unified modelling
What recent advancements in insurance risk and capital modelling have been the most impactful for insurers in terms of improving risk sensitivity and accuracy?
You can see three drivers at work: First, fair value and risk-based metrics have now become standard for insurers globally. That is not to say that traditional approaches - such as amortised cost accounting - have gone away. Rather, the interplay between these metrics – often in different regulatory regimes – has made balance sheet management far more complex, and this is one of the biggest challenges we encounter, particularly among multinational insurers.
Second, insurers increasingly need their balance sheets to “work harder.” In a risk-based capital regime, you avoid risks unless the expected returns are compelling. Investment teams must find ways to reduce exposures to interest rate and credit spread changes, while also identify selective opportunities - often in specific credit sectors.
Third, technology has transformed the operating model for risk and capital management. Balance sheet analytics often relied on spreadsheets and siloed tasks. Today, insurers demand shared, scalable infrastructure where all teams work from the same foundation, with the flexibility to tailor to their own needs. They expect to interact with the analysis on the fly so that strategic decisions can be made in real time - no more waiting for overnight runs.
How can Fentics’ web-based ALM SaaS platform support insurers with insurance risk and capital modelling?
Fentics is purpose-built for analysts and decision makers in ALM and capital management, making it simple for them to access data, calibrate scenarios, parameterise projections, and run analyses. Every stakeholder has interactive access, and can tailor their Fentics sessions to their assumptions and business needs. By enabling all teams to work from the same foundation, Fentics helps to break down silos that traditionally exist within insurance organisations, and allows teams to make quicker and better-informed decisions.
In Fentics, assets, liabilities, and capital requirements are determined with exceptional speed and precision for each applicable regulatory regime. The system currently supports EU Solvency II, Solvency UK, and the Bermuda EBS, with continual expansion and updates. In addition, Fentics can be configured to any other reporting requirement you have - such as local GAAP or internal management bases - ensuring unified modelling of all relevant views.
Fentics is fully cloud based and integrates seamlessly into an insurer’s technology stack. Therefore, implementation can be achieved in months - often weeks - delivering valuable outputs almost immediately. True to its philosophy, Fentics is designed to make life easier and more convenient for insurers, ensuring that every user can get exactly what they need, when they need it.
What role does scenario analysis and stress testing play in Fentics’ risk modelling framework?
Stress and scenario testing are at the heart of Fentics. Roughly half of all system interactions involve some form of stress or scenario testing, which Fentics makes highly intuitive: scenarios are built using drop-down menus wherever possible, with no coding required. For example, once a rates scenario is selected, the platform instantly generates the corresponding valuation curve to apply in all relevant calculations.
After every run, Fentics automatically produces a granular analysis of change for the scenario impact, so that the user can truly understand what is going on, and pinpoint targeted actions - such as adjusting asset allocations or durations - to steer the balance sheet toward desired outcomes.
Beyond its rich off-the-shelf library of stresses and scenarios, Fentics’ parallel processing capabilities allow for rapid, on-demand customisation. Users can choose whether they want to run a particular scenario analysis interactively on the fly, or schedule batch processing, ensuring both flexibility and scalability.
Is artificial intelligence, automation, and real-time analytics being used by Fentics to meet insurers’ risk modelling?
Fentics automates whole-balance-sheet modelling, and its capabilities are continuously expanding to reflect the progress of modelling sophistication in the industry. Users experience the level of adaptability they would get from a team of insurance modellers that is dedicated to them, using traditional end-user tools – except with Fentics, state-of-the-art capabilities are embedded into a robust high-performance system.
The platform delivers these capabilities in real time, allowing users to obtain balance sheet analysis when they need it. Most of the time, users operate Fentics interactively, but for large-scale processes, the batch mode can directly feed business intelligence tools like Power BI, ensuring seamless integration into insurers’ operational workflows. Fentics is also architected to incorporate AI-enabled features as they become relevant and reliable.
