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: This article provides an EV overview, current industry usage, key considerations illustrated by MetLife’s strategic spin-off of Brighthouse Financial, as well as implementation notes.

Description: This article examines potential approaches to the calculation of the risk adjustment component, with a focus on a case study related to a UL product.

Description: The article is based on a study of root causes in insurer insolvencies and impairments, with the focus on potential risk factors and prevention measures.

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: A Framework for Managing Surplus by David N. Becker from The Financial Reporter, May 1999, Issue No. 39.