Portfolio Management
The Portfolio Management module within ClariNet™ allows the user to analyze the
range of possible risk and revenue events within a portfolio of life insurance policies.
Subscribers can import portfolios into ClariNet™ in CSV or XML format and can manage
the portfolio contents interactively.
Periodic valuation of a portfolio can be undertaken by establishing the valuation
rules within the Subscriber Profile. Once these rules are established, valuation
can be conducted using ClearLife's proprietary pricing model, the subscriber's
pricing model or another third party pricing model - with the results reported in
real time to the user.
Ownership of a portfolio of policies brings with it risks as well as rewards and
the ability to assess and manage those risks is critical to any investor. The Portfolio
Management module integrates the ability to assess longevity risk, interest rate
risk, liquidity risk and credit risk. It also allows the investor to monitor actual
vs. expected maturity performance.
Making those trading decisions may require an understanding of the precise impact
on a portfolio's risk metrics, and it is here that the Portfolio Management
module's sandbox comes to the fore. The sandbox allows a trader to model the
risk metrics of a portfolio before and after a given transaction - a purchase or
sale of one or more policies or a combination of purchase and sale. The effect of
a proposed transaction upon risk and revenue expectations can be assessed before
the transaction is executed, improving information in advance of the trading decision.
Finally, as portfolios build in numbers of policies and numbers of lives, investors
may look either to securitize those portfolios or to "match fund" them
with a combination of equity, mezzanine and senior debt. The Portfolio Management
module allows subscribers to model the effect of a given portfolio on the returns
of a defined liability structure. As rating agency activity in life settlements
increases, ClearLife expects to integrate rating agency criteria and any specified
modeling approach into the Portfolio Management module, enhancing its value to subscribers
interested in participating in a rated securitization of a portfolio.