On Thursday, March 24th, the Actuarial Club was pleased to have representatives Joe Kalin and Casey Wang, both recent alumni of UW-Madison, from Oliver Wyman visit for a presentation about work in their life division. Kalin and Wang split the presentation into five sections; starting off with an overview of Oliver Wyman, they then covered Long Duration Targeted Improvements (LDTI) and walked through an Excel case study. They next covered Actuarial Transformation and provided another case study to illustrate the process.
Oliver Wyman is one of four subsidiary companies under parent company Marsh McLennan. Oliver Wyman does consulting business in North America, Europe, Asia, and the Caribbean, with Life division offices in 10 cities around the globe. Clients of Oliver Wyman make up an impressive 25% of Fortune 500-ranked, and they work with over 1500 clients.
Moving on to the main content of the presentation, Kalin talked about Oliver Wyman’s LDTI field, which he currently works in. LDTI deals with changes in GAAP (Generally Accepted Accounting Principles) reporting, particularly earnings projections. Recent changes to GAAP requirements necessitate companies to make expensive adjustments, with a January 1, 2023 adoption deadline. Luckily, Oliver Wyman knows just how to help companies make the proper changes. Oliver Wyman’s LDTI program has four objectives, summarized as “improve, simplify, and enhance”. The first goal is simplify amortization of deferred acquisition costs. Second is to improve timeliness of recognizing changes in the expected liability for future benefits. The third goal deals with market risk benefits, and the fourth goals is about improving effectiveness of required disclosures. The Excel case study covered calculations of present value reserve amounts for different future projections. Kalin explained the different types of rates used in such calculations; the “current discount rate” is the market rate, and the “locked-in rate” is the rate at the time of conception of a policy.
Next, Wang took over for the second main topic, Actuarial Transformation. The goal of Oliver Wyman’s Actuarial Transformation services is to help clients increase efficiency, in order to become more competitive. Transformations have to do with data and technology, actuarial models, process optimization, and organizational effectiveness. Oliver Wyman aims to better organize clients’ data so it can be more easily applied where needed, and to standardize actuarial models used by client companies so they are not repetitively creating models for similar functions. The dimensions of actuarial transformations include data and software strategy, workflow and automation, cloud migration, data science and valuation, and an operating model. Such transformations save clients a lot of time, equip them with new capabilities, lower risk, and increase the scalability of clients’ work. The second case study focused on automation of a validation process. Python code was used to automate the process so that the click of a button in Excel set the process into motion easily.
The Actuarial Club greatly appreciates Oliver Wyman and presenters Wang and Kalin for taking the time to talk with club members about their work. The information and case studies taught us a lot and we look forward to hearing from them again!