Case Study: Scottsdale Insurance Company achieves higher return-on-capital selection with Palisade's @RISK

Scottsdale Insurance Company Utilizes @RISK to Choose Between Competing Opportunities

Scottsdale Insurance Company, a Nationwide subsidiary and a leading excess & surplus and specialty lines carrier, needed to choose between two similar commercial-property opportunities (Arizona vs. Florida) where surface metrics looked alike but catastrophic weather risk could materially affect capital needs and returns. To evaluate risk‑adjusted profitability, Scottsdale used Palisade’s @RISK to model RAROC and compare outcomes under uncertainty.

Using Palisade’s @RISK to simulate log‑normal loss distributions and weather catastrophe exposure, Scottsdale assessed capital requirements against a 10% hurdle rate. Both properties had a 64% chance to clear the hurdle, but when they did the Arizona property averaged an 18% return versus 11% for Florida—leading Scottsdale to prefer Arizona because it would free up more capital for new opportunities. Palisade’s @RISK graphical outputs also simplified presenting the range of outcomes to senior executives.

Scottsdale Insurance Company

Allan Smith

Financial Business Advisor