Description: Feature article discussing the IASB’s and FASB’s introduction of the use of other comprehensive income (OCI) to report certain changes in the value of insurance contracts.

Description: In this article, we summarize inflationary factors that may result in a sharp increase in interest rates and implications for life insurer convexity risk exposure, most notably to dynamic policyholder lapsation. We further provide insights into potential ALM strategies to mitigate this convexity risk. Due to the prolonged low-interest rate environment and low minimum interest rate guarantees offered to policyholders, liability convexity is higher than prior historical periods, which results in life insurers’ ALM positions being extremely vulnerable to short-term interest rate spikes. Convexity mismatches cause issues for life insurers under both rising and declining interest rate scenarios. This means that life insurers are not compensated for taking convexity risk and, therefore, convexity matching should always be considered in the asset optimization process. There are mixed signals from policymakers and financial markets regarding potential inflationary and sharply rising interest rate scenarios. The key takeaway is that life insurers are not compensated for taking convexity risk and it is the right time for insurers to review convexity exposure. There are different approaches available to mitigate convexity exposure through rebalancing of asset positions and hedges within each life insurer’s risk limits.

Description: discussion of the capital management alternatives for funding the additional reserves required due to Actuarial Guideline XXX

Description: This article discusses the whys and hows of managing risk and capital at the enterprise level.

Description: In this article, we provide practical guidance for understanding how to develop and apply an effective risk appetite statement.

Description: Summary of recent surveys to life actuaries regarding assumptions surrounding policyholder behavior in the tail for universal life with secondary guarantees and minimum guarantees on variable annuities. This information is intended to examine and ultimately give guidance to actuaries on how to set policyholder assumptions in extreme scenarios.

Description: Discussion of the movement toward principle-based reserves for LTC insurance.

Description: The five words for ERM are transparency, discipline, alignment, adaptability and resilience. This article focuses on transparency, discipline and resilience.

Description: This paper expands upon current capital analysis by introducing a practical approach that considers the objectives of all stakeholders of an insurance company in setting appropriate capital targets. In addition, the paper introduces a technique for estimating capital adequacy that is based on mapping stochastic distributions of regulatory and rating agency capital measures to observable financial rating transition matrices.

Description: In this article, the author examines the black holes that arise every day in the form of pressures such as: competitive, top line growth, staff expertise, and regulatory to name a few.