Case Study: Scottsdale Insurance Company improves capital allocation decisions with Lumivero’s @RISK

Scottsdale Insurance Company Utilizes @RISK to Choose Between Competing Opportunities

Scottsdale Insurance Company, a subsidiary of Nationwide, faced the challenge of choosing which commercial property to insure when competing opportunities appeared financially similar on the surface. The insurer needed a way to accurately assess risk-adjusted returns to make a prudent decision. They utilized Lumivero's @RISK software to conduct this analysis and determine which property would yield a higher return on capital.

Using Lumivero's @RISK, the company modeled the Risk Adjusted Returns on Capital (RAROC) for two properties. The analysis revealed that while both had the same probability of exceeding the minimum return rate, the Arizona property offered a significantly higher mean return of 18% compared to Florida's 11% when that rate was met. This insight allowed Scottsdale Insurance to confidently choose the Arizona property, which would ultimately free up more capital for the company to invest in additional opportunities.

Scottsdale Insurance Company

Allan Smith

Financial Business Advisor