This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Find out more here

RNA Analytics buys out Algo Financial Modeler from IBM

Published in: Risk Models, Capital Models, Derivatives, Solvency II, Investment risk - strategy, Software - IT, IFRS 17

Companies: RNA Analytics, IBM, Algorithmics, Watson Wyatt, Towers Perrin, Towers Watson

The team supporting the actuarial modelling system Algo Financial Modeler (AFM) has taken over full management of the assets and technology from IBM with backing from outside investment.

The software, used by more than 170 insurers around the world, will be managed by a new company, RNA Analytics, based in Reigate, UK and with branches in Hong Kong and Japan.

Andrew Blackburn, consulting director at RNA Analytics, said the transfer from IBM “will allow us to concentrate on the service and software innovation required to provide customers with a market leading analytics offering for the actuarial and risk management functions.”

The size of the deal and source of funding was not disclosed. The other products in the Algo suite – Algo One, Algo Risk Application and Algo RiskWatch – are understood to be remaining under IBM’s control.

This latest acquisition marks the third time that AFM has changed hands since it was released in 2006 under the VIPitech brand. Originally developed by the life actuarial team at Watson Wyatt, the software was sold to Algorithmics in 2010 after Watson Wyatt merged with Towers Perrin. In 2012, Algorithmics was acquired by IBM.

The core team of 15 staff that has supported AFM in recent years will transfer to RNA Analytics, and a further two staff have already been recruited. “We will aim to bring in at least another four or five people across development and consulting,” Blackburn added.

Blackburn said existing licensees can continue to use the solution as before, and was confident that RNA Analytics would retain clients through the transition and deliver a better product and service. “We are quite a niche operation and for us to truly service our clients, it works better in smaller company,” he said.

The system will be rebranded in the next couple of months and the development plan will focus on several elements, including the expansion of workflow and process tools.

Blackburn said the other driver for development was regulations. The system has a Solvency II standard formula model that is being used by EU insurers, and that will be leveraged for other countries introducing Solvency II-like regimes.

The IFRS 17 accounting standard is another key area for focus and development.

“We already have an example process model built for IFRS 17 and we have a couple of clients, including a key one in South Korea, that specifically bought AFM to make sure they are ready for IFRS 17. We can calculate the contractual service margin, risk adjustment and easily allow for the portfolios, and will continue to develop the processes and example models,” Blackburn said.

Christopher Cundy