With-profits models lack sophistication, survey shows

More than half of insurers do not project risk appetite and resulting future management actions, which could impact their balance sheets

UK insurers need to improve their internal models to accurately capture the impact of management actions on their with-profits funds, says consultancy Towers Watson.

In a survey of 24 insurers, managing a total of 48 with-profits funds, Towers Watson found that 58% did not allow for a modelled projection of risk appetite metrics and resulting management actions in their internal models because of technical limitations. Only 25% projected these at all using stochastic or proxy techniques. The