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: The 2024 Dangerous Risks survey shows respondents react to recent increases in "old favorite" risks as technology evolves and the environment moves away from the pandemic.

Description: Discussion of PBA VM20 requirements for minimum reserves and also current developments on Risk Base Capital C-# Phase III.

Description: Discussion of Alternative or Integrative Care - Fundamental themes, market demand, recent activity, developing an alternative care program, pricing benefits Issue No. 34.

Description: Feature article that gives updates from the NAIC Winter National Meeting in regard to PBA.

Description: Feature article discussing actuarial assumptions in the investment world and financial models.

Description: Results of a Survey of JRMS members re claims changes due to COVID

Description: CD Paper Exhibits - Exhibit #1 SOA from NewsDirect Newsletter, Spring 2000, Issue No. 34, Special Supplement.

Description: CD Paper Exhibits - Exhibit #3 by SOA from NewsDirect Newsletter, Spring 2000, Issue No. 34, Special Supplement.