ADVISE™ - Performance Management

Improve ROE and Earnings Growth

ADVISE – Performance Management makes it very clear which targets are achievable under current operating conditions in terms of reasonable expectations and good or bad luck. Plus, the software clearly identifies obstacles to improving:

• Performance growth rate of capital and surplus
• ROE for the company and individual products
• Value creation through underwriting and investing
• Expense management
• Incentive programs

For example, ADVISE – Performance Management enables you to test proposed price increases to see whether they are consistent with anticipated volume issues. You can audit your assumptions and move forward with a comprehensive understanding of your company and its products.

Create the Right Incentives

To reduce the possibility of surprises, you can use ADVISE – Performance Management to set realistic targets. This powerful software enables management to create the right incentives for both operating units and individuals. For example:

• Charging for capital. ADVISE – Performance Management can distinguish between and measure the capital required to support a business at any given level of risk, or to maintain a given rating, or to meet regulatory requirements. This makes it possible to create incentives that result in an appropriate risk-adjusted return, and helps managers identify what exceeds their needs and can be returned.
• Paying for performance. Since ADVISE – Performance Management simulates a full distribution of possible outcomes, you can objectively determine what represents an average outcome and what represents an above average outcome. You can also identify the effect of the various available layers, such as pricing and the use of reinsurance, on that outcome. As a result, you can offer incentives that accurately reflect each person’s added value.

Answer Critical Business Questions

• How and where is value created by the company?
• Is the company's performance adequate? Which products have adequate performance?
• What is the expected ROI for the company? Which products provide an acceptable return?
• What is the expected average ROE for the company? Which products provide an acceptable ROE?
• What is the overall growth rate and cost of float for the company? Which products have positive float? Which products are contributing to the growth of float? Which products have an acceptable cost of float?
• What is the overall discounted cash flow of the company? What are the discounted cash flows of each product?
• Which products are providing unit exposure growth?
• Which products are profitably priced?
• Where can we make best use of contingent commissions?
• Where is reinsurance helping and hurting?
• What is the identified investment strategy? What is the projected return from investing?
• What are the key incentive targets set by the company? How successfully are they met? How well are those targets aligned with the maximization of shareholder wealth? What set of incentives might be more closely aligned?

Whitepapers