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Life insurance company

In today's world of complex cross-border influences between economies and industries, it is more important than ever to have a quantitative analytical approach that takes into account global interactions in order to make accurate decisions and investment strategies. A leading life insurance company has used Oxford Economics' Global Economic Model to improve their global economic research processes and increase the accuracy of their own economic forecasts.

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Background

Our client regularly analyses and forecasts the real economy and financial markets for their own monthly economic research reports and operational planning purposes. The reports are both for internal use and for its clients, and there was a need to improve research processes and forecasting accuracy.

The challenge

Prior to the introduction of Oxford Economics’ Global Economic Model, the client had not used a model for economic analysis, The economic analysis was done by collecting data published by other institutions, manually combining economic variables, and calculating them in Excel sheets. In order to improve the accuracy of their analysis and to make their own forecasts, they decided to use Oxford Economics’ models.

The solution

The client wanted to use quantitative and consistent economic data in their economic forecasting for asset management strategy development, so in 2013 the client started to use Oxford Economics’ Global Economic Model to support it. The client chose Oxford Economics for the following reasons:

Wide coverage and quantitative analysis covering the entire global economy.
Frequent updates and forecasts for the next five years.
As an independent organisation, there is no bias in the forecasts.
Transparency, as the detailed settings of the model are visible.
Timely local information, with economists in each region. The client believes that the views of local economists are particularly useful for economic analysis where politics is involved.

The result

The client has expanded its capacity for economic research, using the model to produce their own economic forecasts. In addition to that, the client has improved the quality of their economic reports, both internally and for their clients.

The client has seen an improvement in the accuracy of their forecasts in terms of quantitative analysis using the models. The forecast data from Oxford Economics is used as a benchmark in their monthly internal documents to check that their forecasts are not overly optimistic or pessimistic in relation to Oxford Economics’ view.

The client also found Oxford Economics’ model to be very helpful when they developed their own US equity and interest rate models. For example, in their own model for forecasting stock prices, they incorporated Oxford Economics’ GDP forecasts. Oxford Economics’ webinars they attended helped them to consider the relevance of economic variables when developing their models.

The client appreciated that there are not many other institutions that could provide 5-year forecasts with quarterly figures, so the client found it useful to be able to use consistent data with frequent forecast updates in Oxford Economics’ model.

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