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Actuarial Analysis

Actuarial Analysis

What Is Actuarial Analysis?

Actuarial analysis is a type of asset to liability analysis utilized by financial companies to guarantee they have the funds to pay the required liabilities. Insurance and retirement investment products are two common financial products in which actuarial analysis is required.

How Actuarial Analysis Works

Actuarial analysis is involved by numerous financial companies for dealing with the risks of certain products. This type of work is finished by profoundly instructed and certified professional analysts who center around the corresponding risks of insurance products and their clients.

Actuarial analysis utilizes statistical models to manage financial uncertainty by making taught forecasts about future occasions. Insurance companies, banks, government agencies, and corporations utilize actuarial analysis to design optimal insurance policies, retirement plans, and pension plans.

The methodology for actuarial analysis and risk management is based on the concept of asset to liability matching. This concept is utilized in investment management when a product has determined payout obligations.

Instances of Actuarial Analysis

To manage payout obligations, insightful actuarial analysis models will incorporate several factors.


In insurance products, a financial company must manage an asset portfolio that has proper liquidity for generating immediate payout needs and longer-term payout needs. The factors impacting product obligations will change by the type of insurance products.

Factors on an insurance product will likewise influence the amount of premium an insured individual must pay. Factors for vehicle insurance might incorporate the driver's age, previous driving history, vehicle type and age of the vehicle.


One more illustration of a financial product requiring actuarial analysis is a annuity. Financial companies offering annuities invest an investor's scheduled payments in a portfolio of investments with differing risk levels and returns. Annuity products vow to payout scheduled payments to investors after a predetermined time period and are typically utilized for retirement.

Annuity fund managers must guarantee that their portfolio of assets is enough accessible for paying out annuity payments when they become due. They invest in an assortment of market investments to earn a return for their investors while likewise encouraging to make least payments in the product's payout phase.

Pension Plans

For a broader model, investors can likewise focus on pension plans. Pension plans manage a broad portfolio of assets and invest across different risk levels to earn a return while likewise encouraging a payout in retirement.

Pension plans are many times an employee benefit. These plans are commonly managed by an investment board directing actuarial analysis on investments and payouts to guarantee that plan participants are paid fittingly.


  • Actuarial analysis is a form of asset-to-liability analysis.
  • This analysis is utilized to guarantee companies can pay their liabilities.
  • Two common products utilizing actuarial analysis are insurance and retirement investment products.