Enterprise Risk Management

In my ten years here at CRI my relationship with you ALL has been very good. Keep up the good work!

— Doug Hayden
CRI

Services

Enterprise Risk Management

Enterprise Risk Management (ERM) is a critical component of increasing your organization’s value by assessing, controlling, exploiting, financing and monitoring risk. The importance of ERM is self-evident due to the demands for information by rating agencies, regulators and financing institutions. While economic capital modeling is an essential element of ERM, it is only part of the process and not sufficient in and of itself.

At Pinnacle, we recognize the “M” in ERM stands for "Management", not models. We can assist you in the initial review, design and documentation of internal economic capital models and marginal pricing frameworks. Our holistic approach to ERM will help you to document your organization’s due diligence regarding ERM to interested parties.

Our expertise and insight comes from decades of tailoring specific solutions that meet the ERM needs of a wide range of entities and organizations:

Insurers and Reinsurers

We work with insurers and reinsurers on a variety of ERM projects, including:

  • Helping companies articulate their risk appetite
  • Building DFA models and performing DFA analyses (including company valuations) for insurers and reinsurers
  • Working on a variety of issues surrounding capital modeling
  • Assisting in the development of reinsurance treaty pricing models that incorporate rating agency capital requirements
  • Helping prepare necessary documentation for the capital models that they have developed
  • Assist designing marginal pricing models for reinsurance companies
  • Providing assistance for strategic decisions such as expanding into new lines of business or regions
  • Providing actuarial support for Merger & Acquisition (M & A) decisions

Asset managers

We work with asset managers to develop models that optimize asset allocations and that help to match the durations of assets and liabilities.

Regulators

Issues such as aggregation of risk, capital modeling and risk control procedures are all receiving considerable attention by regulators. Pinnacle works with a wide range of clients on these and other ERM issues and is well qualified to assist regulatory bodies in these matters.

Self Insured Entities

Pinnacle helps self insured entities analyze their entire cost of risk associated with the selected retention option. We can analyze various retention levels for a self insurance plan in an effort to maximize the benefit of the plan while focusing on the risk appetite of the entity.

Government Insurers

Pinnacle has vast experience assisting government insurance entities with ERM projects. Typically this would involve DFA analyses and other studies regarding capital adequacy and reinsurance structures.

Public Entities

Pinnacle’s expert staff helps public entities all over the United States in analyzing their exposures, liabilities, and risk management procedures in a cost effective way.

Publications and Media

Captive Insurance Companies Association (CICA) Conference
Captive Insurance Company Reports (CICR)
Authored by Aaron N. Hillebrandt.

Analytics Offer Unlimited Opportunities to Actuaries
Journal of Reinsurance Vol 25 No 1
Authored by Gary C. Wang.

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Case Studies

DFA Model
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DFA Model

Pinnacle was asked by a regional insurer to help build a customized financial model for use in strategic decision making and in determining economic capital needs. The model reflected current and potential underwriting operations. It also incorporated economic scenario generators, capital allocation, catastrophe model results, regulatory and rating agency metrics such as risk-based capital (RBC) and Best’s Capital Adequacy Ratings (BCAR), as well as loss reserve variability. The model was designed to be used to evaluate a variety of strategic decisions, particularly related to underwriting, reinsurance, macro investment allocation, and capital allocation decisions.

Retention Analysis
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Retention Analysis

Pinnacle was asked by a large self-insured regional transportation authority to assess the impact of increasing their self-insured retentions for both workers compensation and automobile liability. We developed a stochastic simulation analysis, based on the program’s historical claims experience and industry benchmarks, that examined not only the increase in expected losses but the program’s additional potential loss variability. Finally, we discussed with the customer the relationship between their current capital position, as well as the current reinsurance market, to ensure the retention they selected for their program was appropriate for them. The authority ultimately increased their retentions, put some of their excess capital to work, and realized substantial savings in their reinsurance costs.

Risk Management Assessment
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Risk Management Assessment

Pinnacle was asked by a state department of corrections to provide a comprehensive, independent review of the adequacy of their property and casualty insurance plan. The independent insurance plan review was necessary for compliance purposes with state insurance regulators. The facility had even stricter self-imposed standards for their insurance plan. It was Pinnacle’s job to review the guidelines for reasonableness and appropriateness as part of an overall risk management strategy. Pinnacle reviewed and adhered to the state code as well as the additional standards provided by the facility. Moving through each line of insurance coverage, Pinnacle offered recommendations and approval notations. The result was an increased level of risk control for the facility, and subsequently led to a follow up review by Pinnacle at the next required consultation.

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