Loss Diagnostic & Forecast for a Subprime Credit Card Issuer
Background: A subprime credit card issuer had difficulty predicting rising losses and wanted an outsider’s estimate of their portfolio’s loss forecast and a diagnosis of the root causes.
Outcome: AQN's analysis revealed a significant portion of the loss increase was due to un-hypothesized causes, which in turn allowed us to create a much more accurate loss forecast for capital planning
AQN’s Approach:
The client provided several years of performance data and over a dozen hypotheses of business changes that might contribute to rising losses
AQN reviewed vintage and segment level performance and isolated the impacts of the client’s hypotheses and business decisions
Analysis proved conclusively that while many hypotheses had some weight, a lack of attention over time on a growing portion of the portfolio drove the largest impact
Key Results:
