RADNOR, Pa., May 28, 2013 /PRNewswire/ -- Lincoln Financial Group (NYSE: LNC) today announced it has collaborated with global professional services company Towers Watson (NYSE, NASDAQ: TW) and global management consulting firm Oliver Wyman, to implement two advanced analytic modeling techniques in its study of variable annuity policyholder behavior. These techniques are intended to help guide and improve assumptions setting, valuation, risk management and new product development. "At the core of Lincoln's annuity franchise is disciplined product development and risk management, which enables us to create sustainable products that balance financial integrity with customer value," said Mark Konen, President, Insurance and Retirement Solutions, Lincoln Financial Group. "Lincoln is bolstering this approach through the use of advanced analytics that bring greater clarity around factors that influence policy lapse rates and client income utilization. These techniques will move our industry forward as they have done in other segments, such as Property & Casualty, and we believe we are among the first in the Variable Annuity space to utilize them." Working with Towers Watson, Lincoln has implemented Predictive Modeling in its analysis of linkage between lapse behavior and variables such as age, gender, and policy size and duration. Predictive modeling is the synthesis and transformation of data into actionable information. "With traditional experience studies, data is most frequently segmented across one or two risk variables at a time. In contrast, Predictive Modeling techniques analyze multiple risk variables simultaneously, allowing Lincoln to better attribute behavior across a broader set of variables," said Guillaume Briere-Giroux, Senior Consultant, Towers Watson. "By using Predictive Modeling, life insurers get deeper and more robust insights from their experience data, which in turn allows for improved pricing analyses and more precise risk management." Through its work with Oliver Wyman, Lincoln combined predictive analytics with new Attribution-Based Modeling techniques to refine its understanding of two key aspects of policyholder income utilization: income start time; and withdrawal amounts. This utilization study advances Lincoln's understanding of how interaction between different policyholder characteristics and behaviors affects policy-level value. "By using emerging experience data, customer science and new modeling techniques, Lincoln has enhanced its ability to translate observed withdrawal behavior into robust valuation estimates for variable annuity Guaranteed Living Benefits," said Aaron Sarfatti, partner, Oliver Wyman. "This multi-faceted approach reflects the leading edge in how companies represent guarantee utilization in liability models, improving valuation precision, governance and stakeholder communication." Disclosure Variable annuities are long-term investment products designed for retirement purposes and are subject to market fluctuation, investment risk, and possible loss of principal. Variable annuities contain both investment and insurance components and have fees and charges, including mortality and expense, administrative, and advisory fees. Optional features are available for an additional charge. The annuity's value fluctuates with the market value of the underlying investment options, and all assets accumulate tax-deferred. Withdrawals of earnings are taxable as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax. Withdrawals will reduce the death benefit and cash surrender value.