New Version of DFA’s Insurance Modeling Technology Adds Multi-Currency Capabilities and Modeling for Businesses with Complex Structures

Feature-rich ADVISE 4.0 Also Creates Greater Realism and Reflects New S&P Requirements

DFA Capital Management Inc. (DFA), the leading provider of Enterprise Risk Management solutions to the insurance industry, today announced the launch of ADVISE™ 4.0 (Advanced Decision & Value Simulation Engine). The latest version of DFA’s unique modeling software, ADVISE 4.0 has a number of dynamic new features including the ability to accurately reflect complex business structures, as well as provide insurance premiums and loss models, reinsurance treaties and invested assets in multiple currencies.

ADVISE allows risk managers, actuaries and other insurance decision-makers to thoroughly analyze their various lines of business by simulating numerous risk scenarios that could have a potential impact. In addition to managing the input assumptions that drive the simulations, ADVISE also runs the simulations and provides analytics on and access to the simulation results.

“The new enhancements in version 4.0 of ADVISE focus on managing the complexity of the insurance enterprise by simulating the different economic, legal and business dynamics within large insurance companies so that better business decisions can be made,” said David Weiss, Chief Technology Officer at DFA Capital Management Inc. “Just as importantly, its greater realism and attention to detail, combined with its ability to reflect complex business structures and provide multi-currency capabilities, make it an extremely valuable tool for large and small insurers alike.”

Currency Translations & Complex Structures

With ADVISE 4.0, models can now contain insurance premium and loss models, reinsurance treaties and invested assets in any currency mixture for the economies available within GEMS™, the company’s economic scenario generator. GEMS focuses on modeling the economic environment in which a company operates and includes both macro-economic and financial market variables. While ADVISE and GEMS can be used separately, together they create a powerful and comprehensive tool that can evaluate every aspect of the environment in which an insurer operates.

“Not only does the multi-currency function of ADVISE and GEMS create a complete modeling environment, but it provides companies with a unique and competitive advantage,” commented Weiss. “Companies can now more accurately simulate foreign operations and their risks by automatically generating foreign exchange conversions and measuring their effects. Additionally, this is the first time they can do this without having to obtain additional custom programming or model development.”

Weiss noted that another important change in ADVISE is its new ability to accurately reflect complex business structures including holding companies, partially-owned subsidiaries and affiliates. “The greater realism in modeling complex business structures will result in more accurate capital allocation to a company's various entities, and help to more closely align planning, financial reporting and performance management systems,” he said. “The ability to easily do this while supporting multiple accounting conventions and performing proper cross-entity accounting eliminations is an industry first.”

Grid Computing and S&P Requirements

Additional enhancements in ADVISE 4.0 include:

• Fault-tolerant grid computing. Simulations will continue to run regardless of the failure of individual computers. Adding fault-tolerance capability to its already grid-enabled software, DFA creates a higher level of reliability, particularly in environments with large numbers of servers where there is an increased potential for single-machine failures.

• Updates to reflect recent changes in S&P’s capital requirement formulas, including catastrophe loss exposure and diversification benefits.

• The ability to define models for external blocks of insurance exposure and the assumed (inwards) reinsurance structures that apply to them. Assumed reinsurance modeling makes it possible to model a reinsurer’s entire portfolio of business, contract by contract. The result is pricing, capital allocation and performance measurement based upon a true enterprise-wide portfolio perspective.

• Creating custom-defined variables for a new level of flexibility and realism. For example, specialized profit commission structures, price dynamics as a function of previous profitability, or targets for share repurchase can be made a function of multiple capital adequacy measures.

Easy Deployment & Low Cost Structure

According to DFA, ADVISE 4.0 is a rapid deployment platform that requires minimal training and development. “A company can build a line of business model in hours and develop full-company models in a few weeks to a few months,” said Chris Suchar, EVP North American Operations for DFA.

Suchar also noted that the Total Cost of Ownership (TCO) for ADVISE 4.0 is fundamentally lower than with other ERM packages. “Other systems typically require a greater investment in external consultants and/or internal resources for model development, and also take longer to implement.”

He added that ADVISE’s modular architecture allows companies to start with focused installations and later deploy additional modules as needed.

About DFA Capital Management Inc.

DFA Capital Management Inc. is the market leader in dynamic financial analysis software for the insurance and financial services industries. DFA’s software-based financial and risk management system is a foundation for competitive advantage for any insurance company with multiple business lines, reinsurance activities, rapidly changing business portfolios, and significant premium volumes.

Founded in 1999, DFA Capital Management Inc. is headquartered in Purchase, N.Y., with offices in Germany and Switzerland.

For media inquiries, contact:

Kathleen Sheridan
Stanton Crenshaw Communications
Tel: +1 212.780.1900
ksheridan@stantoncrenshaw.com

Karen Verelley
Vice President, Marketing
DFA Capital Management
Tel: +1 914.701.7238
Cell: +1 203.856.7273
karen.verelley@dfa.com