Knowledge Base Articles
Part I: Asset and Liability Management Using LSMC - Introduction to the Framework
In the first part of the ”Asset and Liability Management using LSMC” article series, we outline an ALM framework based on a replicating portfolio approach along with a suitable financial objective. This ALM framework, albeit simplified, is constructed to provide a straightforward replication of the complex interactions between assets and liabilities. Moreover, a brief introduction to the LSMC method used to generate all underlying risk factors is presented.
End of LIBOR: A Rising Challenge for The Insurers
Driven by the consequences of the global financial crisis in 2008 and the LIBOR scandal in 2012, the world’s financial regulators set off the search for alternative reference rates that could better reflect the underlying market and would be more difficult to manipulate. Since financial institutions use the reference rates to design contracts of various kinds, the impact of this change will be considerable. However, most of the available analysis and other material on this topic describe the challenges of such a transition only for banks, frequently leaving out the insurers who are significantly affected by the change as well. Therefore, it becomes essential to highlight global best practices regarding the preparation for replacing the -IBOR in the insurance industry.
January 2019 News Update
We have gathered the most exciting news in the areas of financial technology and regulatory changes this month. The latest revision of the FRTB framework receives mixed reviews from the industry. The automated financial advice providers around the globe expand to accommodate the demand from new types of customers - from large banks and insurers to self-employed entrepreneurs. The UK's Financial Conduct Authority changes its focus from the charges and costs aspects of MiFID II to implementing new rules around product governance and research within the scope of the same framework. The rapidly evolving AI technology is anticipated to change the accounting profession as it exists presently.
December 2018 News Update
We've summarised the most exciting news in the areas of automated investment advice and balance sheet risk. The large participants of wealth management industry explore the automated financial offerings, driven by the anticipations of double-digit growth of that market until 2023. The opportunities of automation have been contemplated by the UK's DIY investment facilitators and mortgage providers this month. Furthermore, in December the Basel committee published the report analysing and comparing the banks' cyber risk practices; the potential AI applications to accounting are being explored by the experts and the FRTB framework going live may be postponed.
November 2018 News Update
We've selected the most intriguing news from the domains of automated financial advice and balance sheet risk. The biggest global financial institutions carry on expanding their offerings with robo-advisors, while some of the established automated investment advice providers launch an option to pursue sustainable investments or compliment the digital experience with "human touch". Meanwhile, the industry continues to discover new applications of AI - for instance, modelling illiquid assets as a means of preparing to upcoming FRTB directive, or reducing the time spent on populating tax return forms.