Description: This article discusses key considerations and differences in measurement requirements between IFRS 17 and LDTI, leveraging a term insurance example to illustrate potential impacts on liabilities and, ultimately, earnings emergence.

Description: The introduction and effective application of US GAAP LDTI have increased the scrutiny of those reviewing the updated financial results. That is because LDTI has resulted in significant changes in actuarial reserving and deferred acquisition cost (DAC) models for long-duration contracts, including significant changes to data, assumptions and required disclosures. In light of the changes, greater reliance has been put on companies’ model risk management (MRM) teams and model validations to assess the conceptual soundness and accuracy of their companies’ actuarial models and to assess that the underlying data and process utilized are suitable and appropriate. This article covers a brief background on model validation, walk through a sample LDTI-focused model validation framework/test plan, then provide insights on common LDTI-related validation observations based on the authors' prior validation experience.

Description: The article provides an overview of the federal tax treatment of long-term care insurance contracts, including a brief history of the tax treatment of long-term care insurance, the requirements that must be satisfied in order to be treated as qualified long-term care insurance under the Internal Revenue Code, and a brief discussion of qualified long-term care combination products and chronic and terminal illness accelerated death benefits offered under life insurance contracts.

Description: This article summarizes the second Simon Conference for young researchers in Actuarial Science, Risk Management, and Insurance, which took place at Michigan State University last November. The intent is to publicize the event and promote future participation in similar conferences of young researchers. The article will contribute to expanding the horizons of actuarial research performed by the academic community. Participation in the conference also gives professional development opportunity for practicing actuaries.

Description: Technology has streamlined countless processes in our daily lives, and insurance is no stranger to this transformation. Technology can make insurance simpler and more personal for consumers, and can enable actuaries to better analyze unstructured data, make good decisions, create new products, and find channels to enhance profitability, provided they can tame the flood of information pouring in from across the digital ecosystem.

Description: Life insurance and annuity illustrations are an important part of the sales and ongoing policy maintenance process educating consumers on how the products could perform in a given set of circumstances. While candidates for Fellowship in the Society of Actuaries and even practicing actuaries may have a general knowledge of what they are and awareness of the regulations and applicable standards of actuarial practice, they may not know much about the intricacies of illustrations and illustration testing. The purpose of this project is to create a resource to improve actuarial practitioners’ understanding of illustrations. Additionally, this topic is not currently addressed in the exam curriculum. It is intended that selected sections of the report on this research would be suitable for inclusion in the Fellowship syllabus.

Description: Milliman was engaged by the SOA to conduct two Accelerated Underwriting (AU) surveys, one of direct companies and another of reinsurers. The surveys explored actual results from 2019–2021 and expected results from 2022.

Description: The article describes the factors that should determine the asset allocation of an employer's QDIA, especially Target Date Funds, and suggests that in general QDIAs have insufficient equity in retirement asset allocations.

Description: The article introduces a cashflow matching strategic asset allocation (SAA) framework for life insurers. Given the recent shift to higher interest rates after two decades of persistent low interest rates, insurers have an opportunity to enhance their asset liability management by rebalancing asset portfolios to narrow duration gaps and attain higher risk-adjusted yields. The framework aims to align investment objectives with economic, regulatory, and rating agency requirements. It prioritizes cashflow matching as the primary optimization goal and incorporates security-level asset information to assist portfolio managers in executing SAA seamlessly. The article highlights the benefits of the cashflow matching SAA framework, including greater attention to cashflow matching, unbiased results, readily executable strategies, and stable economic reserves. A case study is included to demonstrate the effectiveness of the framework in improving risk-adjusted return and cashflow matching for a representative liability block.

Description: This is the key findings research report for the sixteenth Emerging Risk Survey.