Description: This article helps companies better understand the currently proposed upcoming VM-22 regulation by comparing the VM-22 measurement model to LDTI MRBs. The article highlights key considerations as companies plan for adoption of these two measurement models. These considerations should help inform a company’s strategy related to the business impacted by these standards.

Description: Sustainable operations under changes in accounting principles and solvency standards

Description: After more than a decade of a prolonged low interest rate environment, long-term Treasury rates have started to increase with higher volatility. While it is generally agreed that a modest increase in interest rates and inflation is beneficial to the life insurance industry, interest rate risk remains a significant challenge for life insurance industry to manage its long duration liabilities, especially under volatile interest rate environments. Learn how to proactively manage interest rate risk and improve capital efficiency through the cash flow based strategic asset allocation (SAA) framework. Discover practical examples of how to combine asset allocation with derivatives to manage tail risk and liability convexity.

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: A jurisdiction’s regulatory regime can make some insurance products capital intensive to write. This can increase incentives for insurers to enter into risk transfer arrangements, such as reinsurance, to support their business and growth objectives.

Description: This article highlights the fact that new requirements for disclosure of average liability duration and interest rates could lead to diversity in practice. It also recognizes that elements of the new disclosure requirements will enable financial statement users to perform their own crude estimates of these averages in ways that could help them to better understand the liabilities and to compare companies using consistent methods. Finally, the article describes how companies might also find value in such crude estimates.

Description: Recently the interest rates have been slowly trending up from the lowest point in August 2020. The focus of this article is on current market trends for long-duration products —including life insurance, annuities, and long-term care insurance —following an extended period of low interest rates, and lessons carriers can learn from similar historical periods of rising interest rates. Innovative and flexible product features will continue to be essential, as the current interest trend may not substantially increase insurers’ portfolio rates. When designing or modifying product features, insurers should consider profitability in a wide breadth of interest rate scenarios and be particularly mindful of the impact that crediting rates and asset durations will have on earnings.

Description: For over a decade, life insurers have been challenged by a low interest rate environment, making it difficult to find investments with adequate yield, manage corporate spreads, and offer competitive products to consumers. While interest rates are still low compared to the early 2000’s, volatility in rates over the past year, during which the 10-year U.S. Treasury rate has increased by nearly 100 basis points, could indicate a longer-term trend of rising rates. What would a rising rate environment imply for life insurance writers? Insurers able to react to interest rate changes with agility can remain relevant in an evolving economy, protecting themselves and their policyholders. This article addresses risks and considerations faced by insurers with respect to in-force retention, pricing and product mix, and reinsurance and mergers & acquisitions.

Description: Interview (Q&A) with Charlie Shamieh, Chairman of Gen Re, against the backdrop of the COVID-19 Pandemic and its impact on Re/Insurance

Description: Hear about modernized reporting capabilities and technical analysis, which is enabled through access to deep actuarial and financial planning data. The webcast will focus on a real post-Long Duration Targeted Improvements (LDTI) source of earnings analysis and on a high-level LDTI forecasting capability.

Description: In this article, we summarize inflationary factors that may result in a sharp increase in interest rates and implications for life insurer convexity risk exposure, most notably to dynamic policyholder lapsation. We further provide insights into potential ALM strategies to mitigate this convexity risk. Due to the prolonged low-interest rate environment and low minimum interest rate guarantees offered to policyholders, liability convexity is higher than prior historical periods, which results in life insurers’ ALM positions being extremely vulnerable to short-term interest rate spikes. Convexity mismatches cause issues for life insurers under both rising and declining interest rate scenarios. This means that life insurers are not compensated for taking convexity risk and, therefore, convexity matching should always be considered in the asset optimization process. There are mixed signals from policymakers and financial markets regarding potential inflationary and sharply rising interest rate scenarios. The key takeaway is that life insurers are not compensated for taking convexity risk and it is the right time for insurers to review convexity exposure. There are different approaches available to mitigate convexity exposure through rebalancing of asset positions and hedges within each life insurer’s risk limits.

Description: The article summarizes implications of rising interest rates on U.S. GAAP and statutory financial reporting for life insurers, highlighting potential tailwinds from steady increases and headwinds from sharp increases. We further provide insights into how insurers can leverage ALM programs and interest rate risk hedging practices to favorably position themselves in a rising rate environment

Description: This article explores some key challenges facing the modeling actuary related to LDTI implementation and shares associated compliance and modernization considerations.

Description: LDTI’s introduction has forced many insurers to examine their existing operations and technologies. They must determine how to optimize compliance efforts while balancing data, analytics and system modernization considerations to achieve maximum value. This article will examine the four key facets—the data, technology, processes, and people—essential to any successful LDTI exercise. It will also touch on the various approaches for tackling LDTI and how a modernization mindset can help insurers realize much greater transformation for the business.

Description: LTC insurers can proactively identify policyholders more likely to go on claim in the near future, and methods to potentially delay or prevent claims, benefiting company and customer.

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: The session will feature case study discussion of how insurers can improve their model architecture and data visualization to prepare for the increasing demands of the future. Actuarial data and analysis has long been limited by the complexity and diversity of historical systems. External pressure on insurers is higher than ever before, as new requirements take effect under PBR, GAAP Targeted Improvements, and IFRS17.

Description: Mergers and Acquisitions (M&A) are reshaping the insurance industry landscape. Some M&A transactions even garner wide media coverage. The presenters discuss current trends in recent M&A transactions and explore considerations for buyers and sellers leading up to the transactions.

Description: Attendees will learn about the risks and rewards of using reinsurance as part of their business strategy. Reinsurance can be used in multiple ways including optimizing value of inforce, supporting planned sales growth, improving ROE, satisfying regulatory requirements, transferring risk, etc. The structures and solutions can take many shapes in order meet companies’ strategic and financial goals. In this session, the presenters will explore the historical and current uses of reinsurance as risk management and value creation tool and discuss developments that may impact the future use of reinsurance.

Description: Mandatory implementation of life principle-based reserves (PBR) is just around the corner, and there is no shortage of work to do, as most products have yet to be moved to PBR. Oliver Wyman recently completed its 2019 PBR survey, with more than 40 participants covering 85 percent of the individual life market, including 23 of the top 25 life writers and five reinsurers. This article will expand on the key survey findings including implementation status and model simplifications.

Description: Mandatory implementation of life principle-based reserves (PBR) is just around the corner, and there is no shortage of work to do, as most products have yet to be moved to PBR. Oliver Wyman recently completed its 2019 PBR survey, with more than 40 participants covering 85 percent of the individual life market, including 23 of the top 25 life writers and five reinsurers. This article will expand on the key survey findings including implementation trends, analysis to date and recent discussions on the treatment of non-guaranteed reinsurance.

Description: There is no “industry standard” approach to managing the vega (volatility) risk inherent in Variable Annuity Guarantees, Fixed Indexed Annuities and other equity-linked obligations. In this session, we will introduce and analyze a range of reinsurance solutions, including full vega risk retention, full vega risk transfer and more sophisticated or custom structures that split the vega risk between the insurer and the reinsurer in various ways. We will also explore other approaches in bespoke risk coverage and show the impact of different assumptions on a generic “VA Guarantee Cost Estimate” that has been developed by Munich Re.

Description: Mandatory implementation of life principle-based reserves (PBR) is just around the corner and there is no shortage of work to do, as most products have yet to be moved to PBR. Oliver Wyman recently completed its 2019 PBR survey, with more than 40 participants covering 85 percent of the individual life market, including 23 of the top 25 life writers and five reinsurers. This article will expand on the key survey findings, including implementation trends, analysis to date, model robustness and common simplifications.

Description: The proposed revisions to the variable annuity statutory framework and the FASB targeted improvement for long duration contract, motivate life insurance companies to re-evaluate their hedging strategy. Recently proposed revisions of AG 43/VM-21 and C3 Phase II, reward companies that have a clearly defined hedging strategy, if the companies can demonstrate that the valuation model and capital model can estimate real hedge performance accurately. The speakers of this session will discuss the hedging implication of the proposed AG 43/VM-21 and C3 Phase II framework. Additionally, methodology computational requirements, back-testing results under different economic scenarios and the resulting hedge credits of different hedging strategies will be compared, including explicit dynamic hedge and implicit dynamic hedge. The speakers will also touch on the impact of rebalance frequency on the performance of dynamic hedge. Case studies will be presented to provide guidance on practical implementation.

Description: Bringing managed care concepts into LTC claims management could benefit insurers, policyholders, and providers. This article outlines the case for doing so, and articulates the benefits to each stakeholder in the LTC claims process.

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.

Description: There is a lot of focus on GTI and its impact on modeling, methodology and transition. However, given the dependencies that exist on the data infrastructure, the implementation of the guidelines is an ideal opportunity to also streamline and improve data storage, data transformation, and reporting processes to create an efficient, effective and scalable data solution. This session will focus on the specific impacts and possible solutions to the following data processes: In force data Experience studies and assumption setting post model data feeds and subledger processes Data warehouse and reporting systems

Description: Discussion of potential volatility to non-participating long-duration traditional contract reserves under US GAAP targeted improvements to accounting for long-duration insurance contracts. Discusses the impact of revising assumptions as well as interaction of revising assumptions with changes to discount rates.

Description: These products effectively provide policyholders access to an equity index with an option pass-through. This new direction blurs the line between more traditional variable annuity and fixed indexed annuity products. This session will discuss these and other similar product innovations, including some interesting regulatory, accounting, and risk management considerations.

Description: Recently, the SCAN Foundation, AARP, LeadingAge, and HHS funded economic modeling conducted by Milliman and the Urban Institute around LTC reform elements. The LTC industry has over the years also generated ideas to address the on-coming expansion of LTC needs in the U.S. For this article, we have brought together three individuals who have long involvement with LTC financing to discuss some of the recent ideas and provide some perspectives on their pluses and minuses.

Description: Recently, the SCAN Foundation, AARP, LeadingAge, and HHS funded economic modeling conducted by Milliman and the Urban Institute around LTC reform elements. The LTC industry has over the years also generated ideas to address the on-coming expansion of LTC needs in the U.S. For this article, we have brought together three individuals who have long involvement with LTC financing to discuss some of the recent ideas and provide some perspectives on their pluses and minuses.

Description: Feature article discussing the impact of health care reform on the direct insurance market and the reinsurance market.

Description: 2004 SOA Spring Meeting, Anaheim, CA. The panel discussed how to analyze LTC flows from an asset perspective, recognize embedded derivatives in LTC and determine strategies for hedging fair value. The goal was for the attendees to learn to view LTC from an investment rather than a liability perspective, recognize embedded risks in today's LTC marketplace, and deal with investment risks in LTC.

Description: A few large insurers dominate the Long Term Care market. This article discusses how smaller companies can overcome the hurdles to entry.

Description: This is a discussion on individual life insurance market needs and product design under conditions of inflation. Specifically it highlights the needs and interests of potential customers during periods of inflation, what problems are created in traditional life insurance product design during inflation, what solutions are available to life insurance companies and what solutions may be available in the future.