Nationwide Selects RMS as Longevity Risk Modeling Partner in the US
RMS, a global risk modeling and analytics firm, announced that Nationwide, a leading U.S. insurer, has licensed the RMS Longevity Model. This will give Nationwide the capacity to more actively manage the risk to its portfolio of annuity and life protection plans, associated with changing lifespans in the American population.
The RMS model was selected by Nationwide because their risk management team believes it provides a conceptually sound, forward-looking view of the key factors that will drive longevity into the future, including potential medical breakthroughs which could have significant impacts on life expectancy.
Steve Ginnan, chief actuary at Nationwide Financial, commented: “providing guaranteed lifetime income is a key part of Nationwide’s vision of being the best at helping America prepare for and live in retirement. As we look to expand our offering in terms of lifetime income guarantees, we recognize the need to consider all possible changes in life expectancy trends. This is an essential part of our risk management of future liabilities, just as we must consider the full range of equity and interest rate scenarios. RMS gives us the analytics to benefit from these deeper longevity risk insights.”
The RMS Longevity Model provides stochastic simulations of future life expectancy, and does not rely only on projecting mortality trends from history into the future. This makes it unlike rival longevity models which are exclusively retrospective in their analysis. Instead the RMS model considers cutting-edge medical technologies such as stem-cell therapy, nano-medicine, personalized cancer treatments and anti-aging science. It also analyzes the likely impact of changing lifestyle trends, such as diet, levels of obesity and physical fitness. By adding the RMS model to its tool kit, Nationwide plans to more effectively account for longevity risk as it designs products to meet the demand for innovative annuity and life protection solutions.
“We’re impressed by the scope of Nationwide’s ambition to help its members make the right preparations for their retirement years,” commented Sofia Ben El Attar Perkonigg, managing director for RMS LifeRisks®. “The fact that Nationwide has selected RMS analytics to understand how longevity shocks could impact their diverse portfolio, shows the value of this model, which offers a holistic view of the risk posed by changes in life expectancy.”
