Description: A discussion of alternative meanings to “Best” in best estimate. When one is trying to estimate a result that is normally distributed, the mean, median and mode will all equal one another. However if the results are not normally distributed, different variance metrics will result in different “best” estimates. When different parts of a financial statement use different criteria for measuring best estimates and different processes for handling variances, the results can be volatile, unpredictable and perhaps unreasonable.

Description: This dialogue discusses the history and purpose of section 811(a) and its historic role in the computation of life insurance company taxable income and, in particular, reserves.

Description: This article describes how there are many kinds of plans and arrangements under which qualified annuities are issued, and the rules governing them differ considerably.

Description: In this article the author uses the backdrop of the Isner/Mahut 2010 Wimbeldon match that lasted an unlikely 183 games to discuss several diverse areas that provide opportunity for risk management.

Description: Provides a technique for carrying out investment performance attribution reporting which provides stable, consistent results without residuals. Provides simple examples and a mathematical defense of the method. Illustrates implementation using numerical integration. Provides guidance to limit application of the technique when there are discontinuities in the underlying exposure.

Description: The impact of Fed’s QE program on the financial markets has been enormous and profound. The tapering and the eventual removal of the stimulus will be equally enormous and profound, and may be disruptive. To adapt to the potential regime change in near future, some investment strategies have been proposed: (1) shorten duration to focus on the short end of the yield curve and create laddered portfolios; (2) reduce allocation to high yield bonds; (3) rotate out interest rate sensitive sectors such as utilities; and (4) use interest rate derivatives to hedge the interest rate uncertainties lying ahead. On the other hand, contrarians who see the QE program continuing may stay the course and consider (1) adding duration, (2) gaining exposure to high yield bonds, and (3) increasing allocation to utilities and telecoms.

Description: This paper discusses a model that is used for the loss process, ratemaking problem and risk classification.

Description: A theoretical study of the interrelationship between the financial and insurance risk markets.

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

Description: The Federal funds rate increased by 4.25% in 2022 with further increases in 2023, which have already resulted in a liquidity crisis for a few banks. As the rapid increase of the interest rates pushed the new money rates above the yields of many life insurers’ investment portfolios, insurance companies are facing a dilemma between compressed margins from peer pressure and the concern with liquidity shortfalls and realized capital losses should mass surrenders happen. This paper discussed main emerging risks under rising interest rate environment, and several ways to mitigate these risks.