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TCM: Tyche Capital Model

Capital modelling is a core part of effective risk management. TCM helps insurance companies make better decisions, use capital more efficiently and optimise their portfolio.

Mature capital modelling can be integrated into many strategic business areas. But it also needs to be dynamic enough to keep up with the changing operating environment and risk profile. Regulatory pressure makes the need for robust and integrated capital modelling even greater.

The TCM is a high-quality capital model built using our Tyche modelling platform. It contains a suite of pre-built functionality, which can be used ‘out of the box’ or as a basis for building customised models. It uses Monte Carlo simulation to forecast future performance, taking account of all material components of the business’s risk profile.

The TCM has been widely adopted in the insurance market, from small mono-line insurers to large global companies. Many client Tyche Capital Models have been approved by their regulator in the Solvency II regime.

TCM supports many business modelling applications:

• Setting capital using a full Internal Model implementation under Solvency II;

• Forward Looking Assessment of Own Risk (FLAOR);

• Internal economic capital and risk profile assessment;

• Capital allocation and risk-adjusted performance measurement;

• Business planning; 

• Reinsurance analysis.

We have built a number of specialist libraries to sit alongside and integrate seamlessly with the TCM. These include a Standard Formula library (including ORSA), an Asset Model, a PRA return library and a paramertisation tool (easy fitting of distributions to data).

We have also developed Tyche Optimiser. This is a multi-purpose optimiser. One specific use is for business planning purposes and this has been fully integrated with the TCM to allow both inwards business and outwards protections to be optimised simultaneously.