Equity-based guarantee products (variable annuities, fixed indexed annuities etc.) in North America currently exceed a trillion dollars in deposits. Policyholder investment knowledge continues to increase and has led to a record level of innovative and complex investment-related products—and it is not showing any signs of slowing down especially in the current low rate environment. To remain competitive in this ever-changing investment product landscape, while retaining their market share, insurance companies need to stay abreast of evolving securities, accounting and tax regulations and policyholders’ risk appetites to develop new forms of guarantees. Given the intermingled risks underlying these products, many direct writers end up taking significant financial market-related risks without fully realizing the long-term impact of these risks on their balance sheet and shareholder value. As a consequence, insurance companies have cut back on existing guarantees and offer managed volatility funds as part of their risk-management strategies. Additionally, the solutions implemented by underwriters to manage these risks range from taking no action to reinsuring (if they can find a reinsurer at a price they can afford), depending on a myriad of influencing factors, including:
- Size of business;
- Cost of required infrastructure/resources;
- Nature of guarantees; Compensation of senior management; and
- How shareholders, analysts, rating agencies and regulators correlate the soundness of a company to its risk-management practice.
These factors are fueled by:
- Lack of market volatility;
- Strong equity markets across the board.
- Low persistent interest rates.
- Volatility in credit spreads;
- Absence of complete reinsurance for these products;
- Reported losses by some of the market players for running either a poor or no hedging program at all; and
- Change of securities/trading/accounting regulation.
Sellout attendance and rave reviews from previous Equity-Based Insurance Guarantees Conferences show that a forum where practicing professionals can freely exchange ideas and discuss common issues is important. We invite you to attend the Equity-Based Insurance Guarantees Conference to participate in an engaging learning environment where you can exchange ideas as they relate to the development of risk-measurement, risk-management, risk-monitoring ideas and tools.
Attend the pre-conference Bridging the Gap Series: Stochastic-On-Stochastic Generators and Their Application to the Proposed C3P2/AG43 Changes on Nov. 5 that is targeted to practitioners at all levels.
What Can Attendees Expect
This conference is designed to give professionals with limited-to-moderate experience an understanding of how to better quantify, monitor and manage the risks underlying equity-based guarantee products. Additionally, for professionals who feel they are already well-versed in the intricacies associated with managing and quantifying such risks or developing products with such risks, the conference provides an overview on what is being done by other experts in the field, the current state of affairs in the industry and how the market is expected to change in the future. Continuing with the recent successful program innovation, there will be breakout sessions on the first day of the conference. The purpose of the breakout sessions is two-fold. The first is to allow attendees to hear experts speak on relevant topics like issues related to valuation, reserving and product development and how sound risk-management practice is built on integrating all these aspects prudently. The second is to improve communications between risk-management professionals and pricing, valuation and product development professionals. Examples of tentative topics that will be discussed in this two-day seminar include:
- Risk metrics used to manage and monitor long-term market risks;
- The role of risk management in pricing;
- Quantifying, modeling and managing policyholder behavior;
- Operational risks exposed to when running a risk-management program;
- The role of pricing and reserving in risk management;
- Development of new products;
- The next wave of managed volatility products, and
- Discussion of how well hedging actually works in practice.
In addition to these topics, participants will also have the opportunity to network with fellow practitioners, including experts in this area, and walk away from the conference with tangible solutions to their day-to-day risk-management, pricing, valuation, and product development challenges.
What Past Participants Have Said
“Several valuable aspects to the program: The insight on the industry and impact of latest events, insight from non-actuaries, as well as actuaries, and the fullness of the review/discussion.”
“Very good networking opportunities and a wide range of knowledgeable speakers.”
“Very good topic selection. Very informative speakers.”
“I thought this was a highly valuable conference. The content was interesting; the debating of different methods and the networking opportunities were great.”
“The program chairman did an excellent job. Very effective program.”