Description: The implementation of the IFRS 17 insurance accounting standard has brought significant changes to the financial reporting landscape of insurance companies. With new disclosure requirements and altered profit analysis, understanding and interpreting future profitability have become a topic of concern for the industry. While stability remains a key objective for insurance companies, the earning patterns might become more volatile especially when the contractual service margin (CSM) is exhausted, and a loss component (LC) needs to be established. Reinsurance, a common risk mitigation tool, can play a pivotal role in managing earnings volatility and minimizing losses for onerous measurement units. In this article, we propose a new key performance indicator (KPI) called “loss recoverability” to assess the performance of reinsurance treaties in achieving these objectives. We explain how this KPI can be utilized in multiple scenarios to evaluate the effectiveness of reinsurance strategies and pursue stability in earning patterns.

Description: This article describes how there are many kinds of plans and arrangements under which qualified annuities are issued, and the rules governing them differ considerably.

Description: This paper, chapter VI of the 1987 Valuation Actuary Handbook, discusses a framework for the valuation of reserves and surplus in statutory financial statements, first providing a detailed section of definitions to clarify to clarify the terms used in the paper. The “new” environment of volatile interest rates is discussed, and the mathematics underlying ruin probabilities, and combinations of risks. Procedures for different products with different types of risks are discussed. Other topics include coordination of investment policy and product policy, aggregate reserves and surplus needed, use of simplifications, financial planning, and reinsurance.

Description: This article focuses on the motivation and trends, rather than mechanics, in Life Insurance Securitization.

Description: The author, noting the inadequacy of traditional ‘rules of thumb’ used for profit objectives, demonstrates that, assuming a stock life insurance company’s objective is to maximize its current value, the profit objective can be expressed as maximizing ‘the present value of book profits per unit of limiting constraint.’ Includes discussion and author’s review of discussion. From Transactions of Society of Actuaries 1983 Volume 35.

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: The September 2014 Issue of the Financial Reporting Section's newsletter, The Financial Reporter

Description: This dialogue discusses the history and purpose of section 811(a) and its historic role in the computation of life insurance company taxable income and, in particular, reserves.

Description: Editorial discussing risk management in today’s economic world.

Description: Article AERF in The Actuary, May 1979, Volume 13, Number 5