Description: Economic capital is everywhere you look in the insurance industry these days. Article explains reasons for this and discusses recent developments and the impact on the financial reporting actuary.

Description: This article presents recent developments and trends with respect to Economic Capital based on the work of the EC subgroup of the SOA's Risk Management Task Force.

Description: Performance measurement is not the primary purpose of either GAAP or statutory accounting. This article discusses alternative methods of reporting used by life insurance companies to better measure financial performance.

Description: The authors introduce an alternative to Tail Contribution Analysis TCA for analyzing business segments and strategies called Economic Profit Analysis EPA. They discuss EPA’s key feature, “volatility replication,” an intuitively appealing process of building investor expectations and capital market information into the risk-and-return measurements used to evaluate strategic decisions. Finally, they illustrate the benefit of using EPA in overcoming the problems of TCA and thereby providing concise reliable information for business decision making.

Description: The article talks about market consistent pricing, how risk neutral pricing and real world pricing are not fundamentally different if used appropriately. And using that knowledge, a rather new concept called the risk-adjusted real world pricing, which is a method where a mixture of risk neutral and real world pricing to achieve a holistic view on pricing, will be introduced.

Description: The article explores the use of economic capital modeling to deliver value to clients by improving the financial security of many individual lives around the world in a cost-effective way.

Description: The selection of the economic capital calculation approach becomes more of a modeling decision. Now let us pause here and think about the arbitrage-free assumption at the beginning. At any time, there can be only one price on any asset. If the company considers the price calculated above as the fair price for its products, then it must hold true that the same price has to be arrived at if the company uses a real-world pricing approach instead of a risk-neutral approach. This gives us a very good basis to calibrate the appro- priate economic capital.

Description: The focus of this article is that while Economic Capital can be a valuable component of the ERM process for insurance companies, an over-emphasis on EC, to the point of neglect of other steps in the ERM process, can reduce the effectiveness of an ERM program.

Description: Calculating the risk adjustment confidence level disclosure required by IFRS 17 if the risk adjustment itself is calculated using a cost of capital approach

Description: Feature article discussing how insurers have reflected volatility in asset return assumptions when determining capital requirements, but have largely disregarded the impact of mortality volatility on their liability assumptions when performing stochastic analysis.