Friday, October 28, 2011

NC Treasurer picks SAS for $1.7M contract to grow pension plan


North Carolina is embracing risk management technology from SAS in an effort to boost the financial performance of its massive $72.8 billion state pension plan. The NC Department of State Treasurer, led by State Treasurer Janet Cowell, and SAS are announcing the deal Thursday. 

“We are excited to be working with SAS on this risk management system," Cowell said in a statement provided to WRAL Tech Wire. "It’s our responsibility to make sure our retirees and current state workers have the pension they expect when they retire. This system will allow us to isolate and measure the various risks across our entire multi-asset portfolio to protect their savings.”

SAS, which provides risk analysis services to governments and businesses around the world, said that based on its research North Carolina is the first state to deploy risk analysis as part of its investment process.

The Treasurer's office noted that it had awarded SAS a two-year contract worth $1.7 million. SAS describes the deal as a “public-private partnership” in which SAS has invested staff and resources for development of the services the state with utilize.

"The Department of State Treasurer will benefit from this multiyear contract through competitive fees based on joint development work of both organizations," a spokesperson for Cowell said. "This partnership will also strengthen an established relationship between state government and a North Carolina-based firm." The contract could prove to be a major victory for SAS, which already works with governments and businesses worldwide to provide risk management analytics and services. The North Carolina contract is “the first time we have applied risk management solutions to state pension funds,” Paula Henderson, head of the SAS State and Local Government Practice said in an interview. She said SAS can shape the North Carolina services package into a product suite that can be offered to other pension funds.

“We are very excited about the opportunity to help the state pension fund,” Henderson said. “It’s a very large fund. Being a North Carolina-based company, we want to do all we can to help make sure we provide the Treasurer Office the best risk tools so investment officials can make the best decisions they can to protect the fund.”

SAS already is a global leader in risk analysis, business intelligence and data mining. The world’s largest privately held software firm is on track for record revenues of $2.5 billion or more this year with sales up 15 percent from a year ago as of Sept. 30. Risk management is one of its five key product offerings. Overall, SAS dominates the data analytics with a 35 percent market share, according to research firm Gartner. 

Treasurer Office Approached SAS

The Treasurer’s office retains all control over investment decisions, Henderson noted. “Our objective is to provide them with the best data available in order for them to make the best decisions possible,” Henderson said. SAS will provide the state with access to its SAS Analytics Lab for State and Local Government, which was launched in 2010 and is staffed by some 250 people. SAS Risk Consulting Practice also is part of the package.

The Treasurer’s office approached SAS with the idea and selected SAS after a process that included several requests for information from other possible solution providers, Henderson said. "The Department of State Treasurer selected SAS with the same disciplined approach that it uses to select all investment managers and service providers," Cowell's spokesperson added. "The Department reviewed the industry for products and services available, interviewed several providers that submitted solutions for the NC Retirement Systems, and chose the provider that best met current and future risk management needs," she said. The contract was signed in July. 

“The new solution contains risk and performance measurement models for fixed income equity, private markets, hedge funds, and provides specific reports and dashboards for pension fund portfolio management,” a SAS spokesperson noted. “It contains data management and workflow processes specific to pension fund assets, and integrates third-party benchmark and market data related to pension funds.”

The data, analysis and processing will take place at SAS. SAS already works separately with 50 states and some 155 local governments through its State and Local Government Practice.

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