Valuation and Modeling Support for a Fortune 500 Life Insurer

Objective

A Fortune 500 US life and annuity insurer engaged Graeme Group to place a senior valuation actuary in its corporate actuarial function ahead of year-end close. The client needed an actuary who could run production valuation processes from the first quarter-end, lead market risk benefit and payout annuity reserve analysis under LDTI, and lead the financial analysis of individual annuity results on GAAP and statutory bases. It also wanted a senior practitioner who would coach the team and propose improvements to its models and processes.

A Graeme Group principal, an FSA and MAAA with valuation, financial reporting and model validation experience across life and annuity carriers, took the seat in December 2025.

Scope of Work

The placement was scoped as areas of support, with the expectation that the work would move as the client’s priorities moved:

• Statutory reserve production for the individual annuity block, including the CARVM valuation and its supporting inputs, runs and reconciliations.
• Market risk benefit and embedded derivative disclosure processes under LDTI.
• Financial analysis of individual annuity results.
• Process documentation and improvement.

During 2026 the scope extended to a tax reserve basis analysis, product earnings analysis for the life business, and then to the life modeling team for planning-projection validation and baseline testing of the target Prophet model.

How the Engagement Developed

Phase 1: Year-End Close

The first weeks were a handover under deadline: shadowing process owners, converting each session into step-by-step documentation, and completing dry runs before close. By year-end the contractor was running the statutory reserving process end to end, from data extracts and valuation inputs through the model run, its controls and reconciliations. In the same period the client asked for an impact analysis of a vendor-hosted GAAP model upgrade. The contractor and a client actuary identified an unintended and material change to a host-contract balance in the upgrade, and the client booked year-end on the prior version. The contractor also took on the market risk benefit disclosure process as the close approached, and an in-force review surfaced data issues that were resolved before the disclosure runs. Early feedback from the client was that the contractor asked good questions, could step into whatever the team needed, and had picked up the operating model quickly.

Phase 2: Process Improvement, Tax Reserve Basis and Product Earnings

After the close the contractor delivered a model improvement plan covering consolidation of legacy valuation tools onto the client’s Prophet model infrastructure, in-house ownership of the vendor-hosted GAAP model, workflow automation, first-line controls, and rebuilt methodology playbooks and process maps. In the spring the client asked for a view on the reserve basis used for the federal tax reserve on its pension risk transfer block. The contractor produced a memo and options deck setting out the candidate bases and their accounting, surplus and audit implications, presented to corporate tax and the client’s external tax advisors. With a junior analyst, the contractor then presented a long-term LDTI earnings projection for a linked-benefit life product to product and finance leadership, explaining the drivers of the projected margins, which leadership described as fantastic work. By the second quarter the contractor owned the upstream steps of the statutory reserving process, and the client extended the placement through year-end 2026.

Phase 3: Planning Projections and Baseline Testing

In mid-2026 the client asked the contractor to support its multi-year planning projections for the life business, which run on the client’s Prophet model across three bases. The contractor validated the base, LDTI and principle-based reserving runs against each other by product group, tracing single policies in a sandboxed workspace where aggregates diverged. That work identified a mortality improvement assumption missing from one run, confirmed corrected assumption tables, and surfaced crediting, lapse and premium inconsistencies for the issues log. Recurring differences were traced to version control across planning copies of the model, and the modeling lead agreed a fourth-quarter cleanup with formula comparison across copies and regression testing for the planning runs. The contractor also took on baseline testing of the statutory reserve calculations in the target Prophet model undergoing validation, reconciling the client’s policy-level baseline calculation to the model and tracing each residual difference to its cause in the model logic. The client’s manager noted in July how far the valuation processes had come in six months, the first planning round was submitted on schedule, and the contractor has been named as backup for the client’s forecasting and planning work.

Services Provided

Principal-Level Placement

The brief called for a senior valuation practitioner who could take a statutory process at year-end within weeks and coach the team while doing so. Graeme Group put forward one of its principals, and the seat was filled by the client’s deadline.

Delivery Inside the Client Team

The contractor works inside the client’s environment on its systems, under the direction of the client’s valuation and modeling leads, with hours approved by the client weekly. The client owns the work program and redirects it as its priorities move.

Continuity and Redeployment

Graeme Group manages the engagement terms and extensions, and maintains a bench of Prophet modelers and valuation actuaries should the client’s program require additional capacity.

Outcome

• Year-End Close With a New Process Owner: The statutory reserving process was taken over within weeks and run by the contractor through year-end 2025 and the first two quarter-ends of 2026.
• A Material Model Change Caught Before It Was Booked: The vendor upgrade review identified an unintended change to a GAAP host-contract balance in time for the client to book year-end on the prior version.
• Scope Extended Across Three Functions: The seat has moved from annuity valuation to treasury and tax analysis to the life modeling team, at the client’s request each time.
• Extended Through Year-End 2026: The client extended the placement ahead of its original end date, with standing working sessions through the end of 2026.
• Prophet Model Governance: The planning-run validation and baseline testing give the client a documented reconciliation between its target model and its baseline reserve calculation, and a cleanup program for its planning copies.

This engagement reflects the senior end of Graeme Group’s placement practice: a principal-level actuary working inside the client’s team, productive from the first close, and redeployed as the client’s priorities moved.