When it comes to helping insurers manage the Long Duration Targeted Improvements (LDTI) to US GAAP, FIS's response has been both timely and impressive.
It took only one month after the rules were published in August 2018 for the company to address key aspects of LDTI – by releasing its first update to the Prophet actuarial modelling solution.
And by the end of 2018, Prophet could already support most LDTI calculations, including liabilities for future policyholder benefits, deferred acquisition costs (DAC) and market risk benefits. This allowed companies to begin modelling their blocks of business under LDTI and start providing FIS with feedback, so it could further enhance its offering.
The last year has seen the company continue advancing the software. Updates have covered the development of LDTI cash flows using conventional actuarial techniques, the calculation of market risk benefits and the ability to meet disclosure reporting requirements, among others.
Prophet provides calculations to users via the company's actuarial libraries, enabling clients to project cashflows for all the various product types sold in the US market. It also has the facility to produce cohort-level results via its US GAAP cohort library – critical for LDTI, where much of the reporting takes place at the cohort level.
By applying LDTI calculations from the Prophet engine, actuarial users can incorporate metrics relating to the new standard in their day-to-day work. As a result, their pricing, stress testing and general projections can all reflect LDTI.
Furthermore, FIS's insurance data repository and Prophet control centre gives insurers a data platform for creating reporting disclosures and transforming data ready for a general ledger.
FIS brought an LDTI solution to market well in advance of the standard's deadline. The Financial Accounting Standards Board recently proposed delaying LDTI to January 2023 for large firms and January 2025 for smaller firms.
FIS has therefore been able to help clients understand the whole impact of LDTI on their business, long before the regulation takes effect.
