Show us the money

If all Danish pensions and insurances were to be paid out tomorrow the companies would have to come up with 1473 billion DKK. New and tougher rules for solvency has paved the way for Actulus, a calculation platform developed in a collaboration between Edlund A/S, University of Copenhagen and the IT University which is designed to ensure that insurance and pension companies always have enough money to meet their obligations.

Death and taxes are the only certain things in human existence and no one knows this better than the insurance and pension business. Here almost all of life’s variables are in play and this poses a great challenge when calculating the companies’ solvency, i.e. if they have enough money to meet their obligations to their customers both now and in 80 years. And it’s not petty cash we’re dealing with here; The Danes have pensions and insurances for 1473 billion DKK and that number increases with 106 billion every year.

In 2009 the European Union passed the Solvency II directive, which is the biggest change in insurance in 20 years with new demands to the size of a company’s money bin and this has resulted in a need for new solvency calculations. One example: Until now the calculations haven’t considered the possibility of medicinal progress that can lift people out of disability and back in to labor, something that could influence finances quite extensively.


I think that many companies including ourselves can learn by the way universities work with and solve problems.

Mads Lauridsen, Chief Customer Officer at Edlund A/S
This is where the calculation platform Actulus, which comprises a universal calculation core and the Actulus Modeling Language designed specifically for actuaries, comes in to play.

“With Solvency II comes tougher regulation in 2016 and it’s been clear from the beginning that these would demand considerably more advanced calculations than the industry has used so far. Actulus helps handle this new challenge,” says Mads Lauridsen, Chief Customer Officer at Edlund A/S who develops software for the pension and insurance business and has created Actulus in collaboration with Mogens Steffensen, professor of life insurance mathematics at the University of Copenhagen, and Peter Sestoft, professor of software development at the IT University.

Ambitions set to high

The project is supported by the Danish National Advanced Technology Foundation with DKK 11 million which is a substantial part of the total budget of DKK 23 million, and Mads Lauridsen recognises that without that support and the partnership with the universities Edlund probably wouldn’t have developed Actulus. At least not in as ambitious a version as today.

“There’s no doubt that Actulus would’ve been a different project without the universities. They contribute with deep insight and knowledge that’s often been essential and this has raised both ambitions and risk within the project. Without Mogens and Peter as well as the grant we probably wouldn’t have started such a massive project,” Lauridsen says.

Ambitions have been high from the beginning aiming at both national and international sales. The first Danish clients use Actulus and promotion at the International Congress of Actuaries 2014 in Washington has generated international interest. This is of course positive but it’s also here that one of the main challenges in a collaboration between business and university lies. Peter Sestoft explains:

“In business there’s a stronger awareness that revenue doesn’t come by itself, so if there’s a delivery of software to a paying customer then other and in the long run perhaps more interesting projects will have to wait. When repeated you risk that something that could really make a difference is postponed for a very long time.”

To be continued

That said both Mads Lauridsen and Peter Sestoft agree that advantages far outweigh the opposite, not least because the clash between the two different cultures has been managed through mutual recognition and open dialogue, and all parties wish to continue the collaboration when the initial project ends later this year.

“I think that many companies including ourselves can learn by the way universities work with and solve problems. When they start the answer is unknown and their methods to handle this uncertainty have influenced our way of working,” says Mads Lauridsen, while Peter Sestoft lists a bigger professional network and the opportunity to experiment in scenarios closer to reality as some of the benefits.


It gives credibility both among my peers at other universities who work with something similar and in my teaching at ITU.

Professor Peter Sestoft
“Also I’ve become more aware of which challenges businesses face and which methods they use and so on. It gives credibility both among my peers at other universities who work with something similar and in my teaching at ITU,” Sestoft says and recommends that other jump in to a business collaboration. As does Mads Lauridsen:

“If researchers and companies can find common ground this is definitely something that we would recommend that others do. The model gives both parties opportunity to tap in to resources and knowledge they might not otherwise have access to and as a business we’ve found new ways to work with our products.”