Description: Despite a clear need and demographics which should be favorable to LTCI growth, the market remains stalled due to lack of understanding on the consumer side, and uncertainty on carriers' side. The 3 key risk areas for carriers are morbidity, terminations, and investment earnings. Financial market innovations which can address these include: repackaging risks as derivative securities, interest rate swaps and options, and inflation swaps.

Description: The bank’s customers viz. non-bank company often get into various kinds of derivative transactions with a bank or some other non-bank company in order to cover or hedge against the unwanted exposure to volatility in interest rates, currency rates or some other underlying rate. A non-bank company defaults when the situation goes unfavorable enough for it to have no other alternative this cascades the impact to many other non-bank companies and banks. I take forward the opinion that non-bank company defaults are more likely than those by a bank in a derivative contract. This risk in the risk management approach using derivatives can be reduced through the derivatives framework proposed in this paper. Presented at 2010 Enterprise Risk Management Symposium, Society of Actuaries, April 12-15, 2010.

Description: As equity markets decline and become more volatile, the likelihood of significant guaranteed benefit claims increases, while increases from mortality and expense fees declines. The article illustrates how to use a derivative contract, a properly structured total return swap, to turn a company's uncertain M&E revenue patterns into predictable revenue.