Description: Interest Maintenance Reserve ("IMR") has become a hot topic recently due to rising interest rates, causing decreases or even negative IMR balances for some insurers. This article aims to exam some new questions facing financial reporting actuaries: - How should negative IMR be treated for statutory reporting? - What are the other actuarial implications of negative IMR? - What have regulators done and/or plan to do about negative IMR? - What are potential mitigants?

Description: S&P Global released its initial version of proposed changes regarding its Insurer Risk-Based Capital Adequacy methodology and assumptions on Dec. 6th, 2021. Unlike prior guidance notes or criteria releases, the proposed changes comprehensively updated the current S&P rating criteria released in 2010. These updates would directly impact many insurers. S&P Global anticipates that 10 percent of existing ratings in the insurance sector would be impacted and the change would lead to more positive rating implications than negative impact. This article focuses on the proposed changes on the S&P risk-based capital (RBC) vs. the current model, then simulate impacts to a representative U.S. life insurer through an illustrative case study.

Description: This article provides an overview of activities that should be considered by an actuary when validating a predictive model. It describes several components to consider when validating a predictive model and provides an examination of various methodologies that can be implemented in the validation process.

Description: Risk adjustment is needed under IFRS 17 to reflect the compensation that a company requires for bearing the uncertainty about the amount and timing of the cash flows that arises from non-financial risk. Companies are also required to disclose the method and confidence level used for the calculation of the RA. However, IFRS 17 doesn’t specify a method and a confidence level, nor does it provide a list of specific risks that are considered to be non-financial risk. Companies need to define them based on their own preferences or existing practices. This article will introduce available approaches and discuss the confidence level approach with potential consideration stemming from industry preferences and illustrative examples.

Description: This article reviews why financial reporting controls are relevant to actuaries. It also discusses the impact of LDTI on controls and the strategic decisions that insurers need to make.

Description: This article summarizes five key lessons we have learned in implementing LDTI and shares our insights on practical ways to address them. This is not an exhaustive list of implementation challenges, but companies that can successfully tackle the issues we describe should have a smoother data and systems implementation transition.