Oversight | Monitor your company's outsourcing arrangements

Box Management

Invest|Pro™ has complete implicit and explicit box management functionality for life assurance companies. Box management functionality is critical for recent Sol II discussions relating to life companies releasing cash, minimising volatility of their own funds and reducing market risk SCR for unit-linked life companies.

‘Box Position’ Definition

  • Units Allocated to Policyholders Differ from Fund Units in Issue
  • Every Life Company has an Implicit Box Position

Arises for Variety of Reasons

  • Policy Admin Systems Can’t Report Small Policyholder Transactions on Daily Basis
  • Seeding of Fund
  • Policy Admin Systems Can’t Report Forecast Transactions
  • Actual Cashflow(t) = Forecast Cashflow(t-2)

Life Companies need to Quantify Gain/Loss on Box Positions Can’t Quantify Gain/Loss Unless the Implicit Box Position is converted to an Explicit Box Position Invest|Pro™ Manages Explicit Box Positions

  • Shareholder ‘Box Fund’ holds Units in All Policyholder Funds
  • Box Units = Policyholder Units – Fund Units

Invest|Pro™ supports both a long term and short term box fund and full financial accounting and fund performance is available for the box funds just as it is for any other fund. The four most commonly used market methods of appropriations (matching units with policyholder money flows, i.e. cancelling units for surrenders and creating units in the case of new money flows) are forecast matching, deferred matching, backdated matching and seeding of funds. Invest|Pro™ supports all of these methods and a mixture of these approaches. The method used sometimes depends on the functionality of the policy processing system and on its ability to provide forecasts to Invest|Pro™.

Unitised Creations and Liquidations - Approaches
Recent Sol II discussions on matching have brought this functionality right to the top for many CFO’s of life companies. FRS with its actuarial heritage is uniquely positioned to assist finance and actuarial departments to implement their chosen approach to Releasing cash, minimising volatility of own funds and reducing market risk SCR for unit-linked life companies.

Application Areas Arrange a call with one of our sales team