Mortgage — Feasibility studies

Milliman has played an important role in the evolution of the insurance and financial services industries. We have the experience to deliver insight into emerging trends in the context of your specific business dynamics. Supported by expert analysis, we offer focused advice on corporate strategy, risk management, product offerings, distribution and other key areas. Our sophisticated software tools reflect the latest advances and support essential risk management functions, including projections, pricing, reserving, text mining and other predictive analytics.

Risk share feasibility studies

Milliman consultants combine actuarial and modeling expertise with capital markets structure analysis to deliver high quality and meaningful financial feasibility studies. We help risk share participants estimate losses, capital requirements and expected cost/ benefits from a risk share transaction for agency or non-agency investors. Our services include actuarial analysis of retained losses by risk share participation layer and expected funding requirements, strategic financial planning, modeling, and forecasting.

Today’s challenging environment allows for innovations in risk sharing alternatives for our customers. Milliman consultants provide:

• Identify and estimate the performance of the underlying reference pool of loans that will be subject to the transaction.
• Model the reference pool’s cash flow based on a given structure or multiple structures to determine best execution), and will highlight the gross, ceded and net retained credit risk elements to clearly show the economics of the structure for all participants.
• Provide negotiation support with the publication of assumptions, work papers and analysis for potential third-parties through release agreements to aid management, auditors, and regulators.

Risk retention analysis

Clients who choose to retain risk believe that in the long run, retaining a portion of the risk is more cost-effective than transferring it through the purchase of insurance or reinsurance. Using sophisticated tools and analytical skills, we can help you identify your optimal retention level, evaluating such factors as your organization’s appetite for risk, insurance market factors, and regulatory constraints.

Capital analysis

Regulators and financial counterparties require substantive quantitative analysis to evaluate a financial institution’s available capital during stressed economic conditions. Our models provide independent analysis incorporating deterministic and stochastic loss rate results. GSE mortgage insurer eligibility requirements are currently being drafted. Milliman can assist in modeling mortgage insurer’s specific capital needs based on mortgage credit risk indicators, prepayment propensity, and underwriting and economic considerations. 

Credit risk analysis

As an independent consulting firm specializing in credit risk analysis and risk management techniques, Milliman assists many clients in developing analytical models to assess the credit risk elements of their operations. Milliman is well positioned to develop such models, through its diverse and specialized expertise in a number of areas including credit risk management and structured finance.