Milliman

Milliman brings the benefits of cloud computing to the wider market

With the MG-ALFA cloud computing solutions now commercially available, Patricia Renzi, MG-ALFA Global Practice Leader, talks about the advantages of hosting actuarial software in the cloud and the launch of Vega, a new Solvency II reporting solution

How has Milliman enhanced cloud computing?

Milliman has two offerings around the MG-ALFA platform that provide clients with the opportunity to take advantage of the cloud. MG-ALFA Compute for Windows Azure is now commercially available, providing users of the MG-ALFA desktop solution with the ability to access the cloud for extra compute capacity on a true on-demand basis. Using the cloud for computing power, users can both control costs by paying only for what they use and better meet deadlines due to the scalability provided by the solution. At the Phoenix Group, the solution is routinely running on 8,000 cores but we have tested scaling to as many as 30,000 cores.

In addition Milliman also offers a cloud-based version of the MG-ALFA product that provides work-flow management, automation of the entire valuation process, and complete version management and auditability/logging. In addition, as a business-critical SaaS platform, the MG-ALFA cloud system employs numerous measures to maintain high availability. Milliman staff provide 24x7 monitoring of services using proprietary diagnostics, event management, and other service management techniques.

What is the level of demand?

Most of the traction for on-demand computing is in the US where we have the largest market share for the desktop solution. The effort for companies to take advantage of this is minimal as most are already utilising our grid-computing options. Interest is also growing in the US for the full cloud solution as companies prepare for a principles-based approach to reserves and capital.

We are bullish about prospects in the UK and Europe and have garnered strong interest from some large and several medium-sized firms, looking for a fully automated and controlled environment which also provides the on-demand computing resources to get reliable results quickly.

With the Phoenix actuarial systems transformation nearing completion, we have more time to market the solution. We are extremely pleased with how the project has progressed and that it is coming to a very successful close.

How is the role of actuarial software changing?

Historically, actuarial software has been used more as a tool within an organisation as opposed to a mission-critical software application. Re/insurers can benefit immensely by having fully automated end-to-end processing capabilities within their organisation, which means embedding actuarial software into the IT infrastructure and linking all the systems and databases, so the reporting process is reliable.

To be able to accomplish this successfully, actuarial software has to be elevated above just being a tool that the actuarial department uses. It should be seen as a piece of a company's software puzzle that helps manage its business from when it first comes in from the customer interfacing sites to the reporting to regulators and the board.

What are the drawbacks of moving to the cloud?

Security is the first concern when we start talking to companies about moving to the cloud. Certainly Microsoft understands these concerns and the security protocols employed in its data centres are top-notch.

The solution has been built to insure data is protected. When using the cloud from the desktop solution, the data is transient and is not stored in cloud. Data remains locally within a company's internal environment and any information that is moved up is encrypted and sent on secure lines. We have testing done by a third-party company to certify everything is secure. So I think we have all the pieces in place to get companies comfortable with cloud computing.

Milliman continues to be one of the frontrunners from the financial services industry in how we are using the cloud. As a Microsoft partner, we have a very strong working relationship and having the access to the company's development, product and marketing teams has been extremely valuable to us.

What are Milliman's other new initiatives?

One important development is the release of Vega, the first module from the new Milliman STAR (Solvency Two Analysis and Reporting) solutions suite. Vega is a Solvency II reporting solution that implements all the reporting requirements of the directive and performs standard formula calculations. Firms will be able to produce internal reports that analyse model results from different regions, risks, or business lines on a group or entity level, in addition to external reporting of the quantitative reporting templates.

We have also just completed a tool that performs Least Squares Monte Carlo (LSMC) calibration for curve-fitting, which has been used within the MG-ALFA system at the Phoenix Group to monitor solvency movements as a function of actual market changes on a daily basis.

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