Description: Long-term guarantees place unanticipated burdens on companies because of the degree to which the environment can change. These risks are compounded when combined with estimation of policyholder behavior, especially when solid experience data is not available. When risks are properly reflected, long-term guarantees do not always provide value to the customer in excess of the manufacturing cost. The product development actuary is challenged to compare customer value to company cost and use that measurement to identify novel ways to design products to better serve customers.

Description: This article addresses the difficulties of risk modeling in a poor economic environment. The problems include imperfect vendors of data, facing events that have never occurred before, unpredictable consumer behavior, conflicting data sources, and AAA credit doesn't always mean AAA.

Description: Editorial that explores how underlying issues of the economic bubble were actuarial in nature.

Description: This article presents a case study that examines the implication of using real-world interest rate scenario generators with a block of fixed deferred annuities. We contrast cash flow testing results based on New York 7 deterministic scenarios to stochastic scenarios generated with the Academy Interest Rate Generator , as well as an alternative economic scenario generator designed explicitly to capture the risk of a persistently low interest rate environment and the transition to a rising interest rate environment.

Description: In this paper, we illustrate how to value American-style options using the Least-Squares Monte Carlo LSM approach proposed by Longstaff and Schwartz 2001 and investigate whether there exists an optimal regression complexity in the LSM framework for options pricing. In particular, we use the smoothing spline in the regression step, which allows us to control the regression complexity on a continuous scale with just one tuning parameter. Numerical results on American put options indicate that we need to use more than a linear regression, but as the regression becomes more complex, the accuracy of the LSM method quickly deteriorates. From 39th Actuarial Research Conference.

Description: Public DB plans have fatal designs such as basing benefits on a few years of earnings. Redesigning DB to be similar to SS will alleviate solvency challenges.

Description: This article discusses how publicly traded companies fail to realize their full potential due to a lack of clarity in identifying which shareholders they are trying to serve, especially when viewing short term versus long term goals.

Description: This article provides an overview of the different types of real world interest rate scenarios that practitioners use in the life insurance industry and explores different approaches to building those generators.

Description: Discussion of competing theories for valuing public pension liabilities. Emphasis on revised Actuarial Standards of Practice that focus on the purpose of the measurement.

Description: The importance of financial wellness has been increasingly recognized in the last few years. More organizations are sponsoring programs to assist people in different stages of their life.