“Practical Guideline for Funding/Solvency Ratio Attribution” wins Dietz award

Ortec Finance’s Maarten Niederer won the Dietz award for its “Practical Guideline for Funding/Solvency Ratio Attribution” article in the Journal of Performance Measurement.

Ortec Finance’s Maarten Niederer won the Dietz award for its “Practical Guideline for Funding/Solvency Ratio Attribution” article in the Journal of Performance Measurement, published by The Spaulding Group.

Maarten Niederer, about winning this award: “I’m proud about winning this award. I’m very glad I have been able to make a valuable contribution to spreading our performance measurement & attribution expertise. Observing various regulatory regimes around the globe, I formulated a generic practical framework that explains the changes in funding and solvency ratios in a systematic, coherent, and fair way. The drivers of these changes may range from high level modeling choices down to the individual investment decisions.”

Maarten wrote an article on funding, or solvency, ratio attribution. The funding ratio is a key measure used by pension funds all over the world and has a counterpart among insurance companies as the solvency ratio.

Maarten’s article gives a practical overview of how to explain the changes in this ratio over time.

Both ratios indicate the value of assets currently owned relative to the future liabilities that need to be funded by those assets. For the purposes of the ratio, future liabilities are discounted to their present value. However, it is uncertain whether the assets will meet the expected return implied by the discount rate. As these ratios indicate the likelihood that future liabilities can indeed be met, they are key health indicators for life insurers (solvency ratio) and defined benefit pension schemes (funding ratio).

Comments by the publisher

The Spaulding Group: “Our winners are from a rare group of experts in the industry who share their time and expertise with no expectation of acknowledgment or reward. You will see his name listed among the other award winners in our Fall 2022 issue33. Congratulations!”

See here our earlier items on Maarten’s publication and webinar (materials) on this topic.