The traditional life insurance policy - term life - has become commoditized. Armed with the internet and bombarded with email, consumers were enabled with pricing transparency that reduced the profitability of term life to long-term breakeven, if that.

Witnessing this shift, life insurers began moving into the arena of hybrid financial products in direct competition with banks, brokerages and alternative investment vehicles. Premium income increased but margins were squeezed and interest rate risk became the focus of regulatory scrutiny.

Life insurers that offer financial products enjoy profit margins that benefit from low short-term rates and higher long-term rates - a steep yield curve - however, the nature of interest rates suggests that curve flattening and inversion can pressure margins and ruin inadequately capitalized firms.

It is to this point that AQS proved its patented asset liability management system, PALM, to a large domestic insurer (see our case study). Duration management was the problem and the solution was not immediately intuitive.

Armed with PALM, our predictive modeling capabilities, a deep understanding of the regulatory environment and advanced reporting, AQS enables 'Success by Design'.

PALM Technology - Success by Design