Hardware Resource Implications of the Principles-based Approach: The combination of deterministic seriatim reserve calculations and stochastic analysis will increase processing demands on hardware by an order of magnitude or more, even without considering the number of additional investigative and test runs required to reach decisions on assumptions and model definitions. Model compression or other approximation techniques will impose additional strain on staff to satisfy peer reviewers and examiners as to the validity of the resulting calculations. Hardware solutions to run-time concerns will be increasingly attractive as technology prices fall and actuarial staffing costs increase.

Software Implication: The ability to efficiently scale all component processes of Principles-based valuation and capital requirement in order to exploit additional hardware investment while retaining required levels of control and auditability will be crucial. The costs of all technology and IT infrastructure to support the additional hardware must also be considered.

AXIS maximizes payback in additional hardware: AXIS utilizes distributed processing and a proprietary Grid solution that scales flexibly and efficiently, without requiring access to hundreds of processor cores, and without significant investment in ancillary hardware, software or IT support that a typical enterprise Grid approach will entail. Users retain the ability to access and control remote processing on server farms with security, auditability and reliability. Increased performance through distributed processing will lower reliance on model compression and scenario reduction, and facilitate testing and validation, thus making actuarial staff more productive.

The fundamental concepts and implications of PBA in the US while not finalized are sufficiently well-defined that software solutions should be assessed today. PBA could be enacted into state legislation for statutory reserves in the near future, which implies pricing activities should soon start anticipating PBA.

No doubt all vendors will be redesigning software to provide the specific functionality implied by PBA but can they meet this ambitious timetable?

AXIS already meets these criteria. Canadian companies have been using AXIS to meet the demands of a principles-based framework like this for years. AXIS has been convergent software for years. AXIS has always focused on speed, flexibility and integrity.

For more information on AXIS, contact us directly.