Through the Actuarial Industry Partnership Program (IPP) at the University of Michigan, sponsored by the Society of Actuaries, M Financial Group collaborated with interns on two projects.
Predicting Financial Impairment Among Life Insurers
The ability to evaluate a life insurer’s financial stability is important for M Financial and its Member Firms. As financial impairments in our industry are rare occurrences, it can be statistically difficult to predict.
Using the Random Forest Classification Algorithm on data that is publically available from A.M. Best, the IPP team identified the most important predictors, ranked companies by impairment probability, and determined M Carriers to be financially healthy. Read the presentation.
Credibility Methods for Life Insurance
Credibility theory has not been widely used in life and annuity business. The Actuarial Standards Board revised Actuarial Standard of Practice 25 (ASOP 25) in 2013 to include individual life coverage, making credibility methodology important for life actuaries in pricing and risk assessment.
The IPP team analyzed M Financial’s experience data and made recommendations based on their observations. Read the report.According to the report:
“A partnership between the actuarial profession and the academic community is essential to the continued success – even survival – of the profession.”