FTI Consulting was engaged to verify the veracity of the financial model and identify ways to improve the company’s overall capital efficiency.
With confirmation of the model’s accuracy in hand and model governance in place, Clearcover identified ways to improve its capital allocation to support its growth strategy.
Our experts developed an “after-before test,” which verified the veracity of the financial model and ensured that the overall model calculations performed as designed and that the underlying assumptions were reasonable.
We performed a high-level reinsurance testing and identified reinsurance alternatives to improve Clearcover’s overall capital allocation strategy.
Although not part of the original scope, our team identified other areas of improvement, including model governance. As part of an ERM framework, we identified areas to enhance model documentation and controls and investigated the potential benefits of utilizing capital modeling tools.
FTI Consulting’s actuarial professionals and modeling experts utilized inputs derived from the company’s actuarial modules to determine the model’s overall soundness and effectiveness.
The team performed an assessment to ensure key drivers such as policy retention rates, loss ratios and expense ratios were reasonable.
Our actuarial experts reviewed Clearcover’s use of reinsurance to better manage its capital.
The team reviewed Clearcover’s use of intercompany cashflow arrangements and performed limited scenario testing of potential alternative reinsurance structures to enhance its capital.
Additional areas to improve capital efficiency were reviewed, including the use of surplus notes, changes in investment strategy, introducing non-renewing policies in underperforming states and providing managing general agent (“MGA”) services to bolster revenue.
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