The cycle of product launches is constant for life insurers and, in tandem, existing product portfolios close at an increasingly rapid rate. Although dormant, these portfolios of “legacy” clients and products still require ongoing maintenance and often reside on older technology, whereas newer products are managed on newer systems.
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We’ve previously discussed how outsourcing a one-off project or business event can allow organizations to minimize the strain on internal resources during a planned or unexpected event. One group that can benefit from this trend includes banks and credit unions. Many of these organizations may not realize that there are outsourcing solutions specifically tailored to their regulatory compliance needs.
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Pension schemes and scheme members have a common metric of success—members retiring with enough money to live comfortably. To some extent, achieving this goal sits with the members. They decide how much they save, how often and how that money is invested. Plus, it is in their best interest. So why isn’t it happening? And why is there a seeming lack of urgency on the part of these investors?
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Chartis Research has released their ALM Technology Systems 2021 report, providing an analysis of the market and vendor landscape for asset and liability management (ALM). SS&C Algorithmics Balance Sheet Risk Management solution is ranked as a leader in each of the four RiskTech Quadrants included in the report.
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The retirement industry was already fast-paced and dynamic before 2020, as an aging population prompted providers to evolve their retirement plans and practices. Flexibility and efficiency have become standard as firms face increased competition, regulation and complexity. Layer in the uncertainties and catalysts over the past several months, and the pressure has only heightened.
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The concept of Risk Adjusted Return on Capital (RAROC) has been around for many decades. The idea is quite simple—that not all returns are equal. If two investment approaches result in the same level of returns but one incurs much more risk to do so, then obviously any savvy investor would choose the less risky approach. The “risk” term in this equation is completely subjective. There are many ways to define risks, such as Value at Risk (VaR), Volatility and Standard Deviation. But why should analytics only consider financial risk? In today’s investment world there should also be some sort of consideration for the environmental and social attitudes and practices of the companies being invested in.
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CECL adoption is in the rearview mirror for many SEC filers, but for others, it is still on the road ahead. As other financial institutions prepare to comply with CECL in 2023, there is much to be learned from those who have already adopted it. Likewise, those who adopted in 2020 still have plenty to learn from each other as they think about the path ahead and solidifying their CECL approach.
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We have written extensively about the importance of asset managers’ ability to provide products that are unique and differentiated. This is likely to be especially true as we begin 2021, a year that will probably continue to be characterized by a high degree of uncertainty, which may weigh heavily on investors and their advisors.
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