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: Businesses across the board have been drastically impacted by the effects of COVID-19 over the course of 2020, and insurance was not immune. Perhaps most relevant to this industry’s current capital and liquidity concern is the prevailing low interest rate environment. This has been a global trend in the last decade, and treasury rates in much of the developed world are at or near zero. Reduced investment returns limit an insurer’s ability to achieve their desired return on equity, eliminating previously profitable strategies that depended on the leverage of life and annuity balance sheets. Focus and activity have instead shifted to other methods to counteract the low interest rate markets and accompanying capital strain. Examples include increased mergers and acquisitions (M&A) activity within the insurance industry and an increasing focus by private equity firms in the insurance market for asset-intensive products, both of which reflect the goal of increasing yield rates on capital.

Description: This article shows a comparison of the growth rates of the S&P 500 common stock index vs. the U.S. Consumer Price Index over various 5 and 10 year periods.

Description: The article discusses indexed-linked securities in the United Kingdom and the relationship between the prices of index-linked securities and interest rates, common stock prices and a combination of these.

Description: Column on the latest Investment Section activities.

Description: Chairperson’s column discusses recent events in the investment industry.

Description: Column from the chairperson of the Investment Section.

Description: In this article chairperson Anthony Dardis takes a look back at the achievements of the Investment Section Council halfway through his tenure as chair.

Description: This article provides an EV overview, current industry usage, key considerations illustrated by MetLife’s strategic spin-off of Brighthouse Financial, as well as implementation notes.