Description: ongoing discussion of the proper interest rate to use in discounting liability cash flows to reflect credit risk of the insurer in a fair value accounting system

Description: Discusses the recent developments with RBC requirements. At the forefront of the RBC changes is the stochastic exclusion test.

Description: Performance measurement is not the primary purpose of either GAAP or statutory accounting. This article discusses alternative methods of reporting used by life insurance companies to better measure financial performance.

Description: Discussion of what is included within the scope of Enterprise Risk Management and why it is of significance to the jobs of financial reporting actuaries

Description: A discussion of life insurance securitizations and how they can be structured to provide surplus relief associated with onerous reserve requirements.

Description: We explore the considerations regarding discount rates in the new US GAAP Targeted Improvements, including selection of observable rates and methods for extrapolations rates where there is no observable data.

Description: The selection of the economic capital calculation approach becomes more of a modeling decision. Now let us pause here and think about the arbitrage-free assumption at the beginning. At any time, there can be only one price on any asset. If the company considers the price calculated above as the fair price for its products, then it must hold true that the same price has to be arrived at if the company uses a real-world pricing approach instead of a risk-neutral approach. This gives us a very good basis to calibrate the appro- priate economic capital.

Description: Readers are given an introduction to a PBA Implementation Guide for Life Products.

Description: Calculating the risk adjustment confidence level disclosure required by IFRS 17 if the risk adjustment itself is calculated using a cost of capital approach

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.