Algorithmics signs Hermes and enters into development partnership

Toronto/London - October 13, 2008 -

Algorithmics announced today that Hermes Fund Managers Limited (Hermes), which manages the BT Pension Scheme, the UK's largest pension fund, has signed a five year contract for Algo Risk Service, an outsourced risk management and portfolio construction service. In addition, Hermes has entered into a development partnership with Algorithmics to evolve Algo Risk Service to become the "state-of-the art" scheme restructuring platform for pension funds.

Hermes will implement Algo Risk Service immediately in its pension fund management operation. This will include full risk management, portfolio optimization and ALM capability including stress testing and risk budgeting.

The development partnership between Hermes and Algorithmics will focus on leveraging ARS's current market leading risk and portfolio construction capabilities to build a groundbreaking financial engineering platform across assets and liabilities which will enable the pension fund management team at Hermes to:

  • assist in manager selection
  • allocate and monitor risk budgets and their usage consistently
  • assess areas of over/under utilized risk appetites across the scheme and
  • construct and monitor the efficiency of overlay strategies to restructure the scheme's risk profile.

Wyn Francis, Head of Investment Risk, Hermes Pension Fund Management, said: "Managing such a large and complex pension scheme presents a unique set of risk management challenges. The complexity in controlling the risk associated with a portfolio containing a large pool of liabilities, assets allocated across a variety of classes and managers, demands a robust risk management platform.

"Our partnership with Algorithmics, and the capability of their risk management service, not only meets our current requirements but also offers the flexibility to accommodate the increasingly intricate scheme overlays that will enable us to manage risk more effectively and efficiently. This in turn will be the foundation for the strategic development of our pension fund management business."

Dr. Andrew Aziz, Executive Vice President of Risk Solutions, Algorithmics, added: "We are very excited about Hermes becoming a client of Algo Risk Service in the short term and becoming our partner in evolving its asset owner capabilities over the medium term. We look forward to providing the pension fund industry with a groundbreaking platform that will allow asset owners to consistently monitor the risk budgets allocated to their managers across all investment strategies; to diagnose overall hedging requirements; and to be able to construct the appropriate overlay strategies to execute tactical and enterprise level objectives."

Michael Zerbs, President and COO of Algorithmics commented: "We believe that our partnership with Hermes will create new risk management capability for the pension industry and will cement Algorithmics' leadership position in pension/asset owner risk management. Algorithmics provides its clients with the capability to measure, understand and manage risk across their businesses so they can make the right business decisions and create value."

For more information about Algorithmics' risk management solutions for pension fund managers, visit: www.algorithmics.com/EN/solutions/myindustry/assetmanagement.cfm For more information about Algo Risk Service, please visit www.algoriskservice.com

For further information please contact:
Heather Smith, Senior Communications Manager, Algorithmics (UK) Ltd
Direct line +44 (0) 20 7392 5820 Mobile +44 (0) 7515 974223
E-mail: Heather.smith@algorithmics.com


Notes to Editors:

Hermes is a leading pension fund investment manager, independent of any broader financial services organisation, with £35.5bn under management*. Being 100% owned by the BT Pension Scheme (BTPS) - the UK's largest, we are uniquely placed to understand the issues faced by pension funds and other long term investors. Hermes invests assets on behalf of 206 clients* including pension funds, insurance companies, government entities and financial institutions, as well as charities and endowments. Recognised as a pioneer of core / satellite investment and its evolution into beta and alpha separation, we are at the forefront of delivering long term investment solutions. As the investment advisor and manager of the BTPS, our approach is reflected in the strong returns we have delivered.

We offer investment solutions ranging from alternative strategies such as commodities, hedge funds and our engagement focus funds to real estate, private equity and high alpha specialist equity products. Additionally, we help pension funds meet the highest standards of responsible long term ownership through our innovative Equity Ownership Service, which has over £50 billion* of assets under stewardship. * As at 30 June 2008

Algorithmics is the world's leading provider of enterprise risk solutions. Financial organizations from around the world use Algorithmics' software, analytics and advisory services to help them make risk-aware business decisions, maximize shareholder value, and meet regulatory requirements. Supported by a global team of risk experts based in all major financial centers, Algorithmics offers proven, award-winning solutions for market, credit and operational risk, as well as collateral and capital management. Algorithmics is a member of the Fitch Group. www.algorithmics.com

Algo Risk offers insurers, pension funds and asset managers a fully integrated, flexible platform for assessing future market risk across an organization in a single, consistent, rigorous environment covering all investment strategies across all risk factors and asset classes. It can also be offered as a managed service. It covers both traditional assets and sophisticated, structured products. The Mark-to-Future framework delivers accurate real-time analysis and allows users to assess the impact of a new deal on a portfolio's existing risk profile. It is designed to help firms achieve greater profitability in today's competitive world markets. www.algoriskservice.com

Fitch Group is the parent company of Fitch Ratings, a global ratings agency committed to providing the world's markets with independent, timely and prospective credit opinions. With 49 offices worldwide, Fitch Ratings' global expertise spans across capital markets in over 150 countries. Fitch Ratings is headquartered in New York and London.

The Fitch Group also includes Fitch Solutions, a distribution channel for Fitch Ratings products and a provider of data, analytics and related services; and Algorithmics, the world's leading provider of enterprise risk solutions.

The Fitch Group is a majority-owned subsidiary of Fimalac, S.A., headquartered in Paris, France. For additional information, please visit www.fitchratings.com www.algorithmics.com and www.fimalac.com  

© 2008 Algorithmics Software LLC. All rights reserved. ALGO, ALGORITHMICS, Ai & design, ALGORITHMICS & Ai & design, KNOW YOUR RISK, MARK-TO-FUTURE, RISKWATCH, ALGO ALM, ALGO COLLATERAL, ALGO CREDIT ADMINISTRATOR, ALGO CREDIT DATA SERVICES, ALGO CREDIT ECONOMIC CAPITAL, ALGO CREDIT EXPOSURE, ALGO CREDIT LIMITS, ALGO CREDIT REGULATORY CAPITAL, ALGO CREDITVANTAGE, ALGO ETREASURY CREDIT, ALGO FIRST, ALGO MARKET ANALYTICS, ALGO OPDATA, ALGO OPVAR, ALGO RECONCILIATION, ALGO RISK, ALGO RISK SERVICE, and ALGO SUITE are trademarks of Algorithmics Trademarks LLC.