Gift Annuity Risk Management

Have questions about your CGA pool? We have the answers.

Gift Annuity Risk Management

We have developed a comprehensive package of gift annuity risk management services and modeling tools along with LIRMAS– Life Income Risk Management Analytic Suite–our proprietary business process designed for pools of $10 million or more.

CGA Risk Management Services

  • Start-Up Program Risk Management Plans
  • Risk Audit of Existing or New Programs
  • Asset/Liability Matching Optimization Strategies
  • Reinsurance Optimization Strategies
  • Large Concentrated CGA Recommendations
  • “Underwater” CGA Recommendations
  • CGA Cash Flow and Financial Modeling
  • Investment and Longevity Assumption Sensitivity Testing
  • Internal Communications with Financial Staff and Volunteers
  • Technical Assistance on Gift Design (Assist Donor’s Advisors, Prepare Proposal, etc.)
  • Technical Assistance on Specific Asset Contributions (Real Estate, Closely-Held Stock, etc.)
  • Customized and Specific Policy Recommendations

Our CGA Services Answer the Following Questions

  • What are the demographics of our annuity pool?
  • What is the probability of exhaustion for each of the annuities?
  • What are the projected cash flows and balances given various investment and longevity assumptions?
  • Where are our major potential problems?
  • What is our internal mortality and investment risk of self-insuring contracts?
  • How can we develop policies and procedures to mitigate risks and maximize investment returns?
  • How do we determine when and where to use reinsurance?

Life Income Risk Management Analytics Suite

Our principals recently invented the Life Income Risk Management Analytic Suite. Our proprietary package of CGA risk management models, algorithms and formulas determine the overall pool’s health; exhaustion probabilities using sensitivity analysis; optimal asset allocations given the characteristics of the annuitants; risk retention/reduction/transfer thresholds and policy implications; and optimal strategies for “underwater” annuities. This analysis is beneficial for any CGA pool; however, it is specifically designed for pools greater than $10 million.

This tool uses a proprietary gift annuitant life expectancy table to more precisely measure CGA liabilities. The 15-step business process employs a series of formulas to analyze 10 dimensions of risk, and then offers customized policy recommendations to optimize ending balances while minimizing risks. The report is specifically designed to be developed collaboratively with the charity’s gift annuity investment manager.

Final Report and Pricing

The customized report generally includes 20 to 40 pages of information and 15 to 20 pages of graphical representations (approximately 30 different charts). Fees depend on the number of annuitants and complexity of the analysis. Please contact us for our fee schedule regarding this service.