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Our new software model REVEAL™—Risk and Economic Volatility Evaluation of Annuitant Longevity™—provides insurers in the UK with a more dynamic, sophisticated approach to analysing longevity risk in pensions and insured annuities. The model offers a more robust tool than deterministic or stress-test approaches for valuing these risks.

Current demographic, medical, regulatory, and economic trends demand new tools. As people choose healthier lifestyles and live longer, understanding the true effects of the increased longevity is critical to insurers' future profitability. REVEAL can be a useful tool in many situations, including:

  • Correctly pricing UK-based pension buyouts
  • Successfully navigating the emerging structured finance market for longevity risk
  • Better understanding 'tail' risks as part of an enterprise risk management approach

Flexible tool offers broader and deeper insights into risk

The REVEAL model can perform stochastic cash-flow projections and economic liability valuations with volatility using a wide range of variables, including volatility in the mortality rate. The tool can also analyse benefit elections, payment start dates, future salary inflation, and other variables that affect pension buyout cash flows. The model analyses the likelihood of stress variables occurring and imparts valuable insights into mortality assumptions and other scenarios, allowing management to make more informed decisions when it comes to pricing products, negotiating buyouts, and establishing capital levels.

Licensed only to Milliman clients, REVEAL offers advanced modelling for a more complex insurance market. Like our other advanced software tools, REVEAL was created and continues to be supported by our own team of actuaries, consultants, and software designers. We fully train clients using REVEAL so that they can get the most from this advanced risk management tool.