( - 27:30) - Birny Birnbaum (CEJ) - PRT-Pension Risk Transfer, Long-Term Care, Business Transfers, Reinsurance, Shifting of Risk from Company to Comsumers, Change in Insurance Products from Death Benefit to Investments, Sales Strategies - IUL, Illustrations, method of competition - maximize illustration, doesn't meet consumers needs, unrealistic accumulation values, Regulators have declined to take action with the Illustrations, Companies evade regulations, Bad Competition drives out Good Companies, Disturbing parallels to 2008 Financial Crisis.
Frank Grund-? - Germany - Consumer Protection
27:30 - Moderator - Mentioned Sales Strategies, Interest Rate Environment, yield pressure on insurers, how are insurers dealing with it.
McGraith - Search for yield is not new, it's been here since the beginning of the industry, what is new is the long duration of the low interest rates.
Frank
?-46 - - Run, Interest Rates, Surrenders, Surrenders Penalties in US, not Europe, valuations underwater, Companies selling assets, disintermediation, asset-liability matching - Difficult - long-duration liabilities, Solvency 2 - Sovereign Debt - Key to Life Companies - Adjust Products and Portfolios, Shift to less Capital Intensive products - Unit-Linked, bio, Fee Generating
Moderator - Lapse, Low interest rates, consequences of PE involvement in the Insurance Industry
Birny Birnbaum (CEJ) - interest rates, guaranteed products, write-downs. PE - puzzling result - companies are selling blocks of business, PE is buying them. Reinsurance, reserving. Insurance Business Transfer laws - ignore consumer property rights, ex. VW sold warranty now with ACME. PE - Increase sales to bring more AUM. Illustrations, Sales Practices, inflated and deceptive values, . Needs supervisory analysis and techniques.
Moderators - re: puzzling question - PE - What is the Secret? to Frank: What do you think?
54-59 - Frank - Main Goal is consumer protection, no matter who owns the company, block of business, guarantees are losing interest for companies, coming to us, law-consumers can't be treated worse with new company [Bonk: 1936 - GOV - Missouri Life - lien, 5% extra Premium], PE looking at less well capitalized companies, Reinsurance is a different issues - Supervisory Arbitrage-?
59- - Moderator - Long-term portfolio, goals. PE Poll, to Michael - Benefits of PE? Policyholder Protection, Conflicts of Interests-Company v Policyholder
1:00- - Michael - 1) Transactional - Happy Union 2) Investments - . Most companies are looking for a long-term ownership stake, not 2-5 years. Industrial Loans/Private Credit/loans - shifted to non-banks. Have out performed Bank Loans. Alternative Asset Managers. Win/Win - Happy Union. -- Policyholder Protection - Absolutely Essential, regardless of company, Big Concern. Capital Management, ALM. Supervisors have key roles in ensuring both of those ... are management at the company level. Portfolio Construction. Capital buying company should be long-term. Governance program, Board, investment decision-in the interest of the policyholders. CIO -important. Affiliated Transactions, shared with the Supervisor, investment decisions are for the policyholder. Frequent contact between Supervisors and Companies.
Moderator - Win/Win, Capital Management/ ALM. to Stephan - Company Investments/Risk
Stephan - Where does Risk come from? Investment, Liquidity, ..... not seeing unacceptable increased investment risk. Less Liquid investments - examples. Life Portfolio. minimal amount of shock potential. companies increasing cash position. Birny - Puzzle - being done by taking increased investment risk, model hasn't been tested yet. COVID. Barrier of Entry, alternative investments, hedging, ability to shift portfolio quickly.
Moderator - GIMAR, Risk and Opportunities, Illiquid, New Topic - Emerging Risks - to Stephen - Underwriting of Cyber Insurance, Should we be concerned?
( - 1:17) - Stephan - Very interesting line of business, certainly challenges, no experience data for this line of business, Actuaries, [Bonk: "Guessing"], Reserving challenges, event, policyholder awareness. Rate Increases. Heightened loss experience. Need to Solve for the Catastrophic events. Modeling, but doesn't have the history of other lines. another challenge-losses may not be geographically contained. Conversation in Board meetings. ?Silent Cyber". Policy Language. How much coverage is being offered?
(1:17- ) - Moderator - to Bernie- policy gaps, Solutions - ?
(1:18- ) - Birny Birnbaum - Terrorism, overlaps. Set of issues that transcend traditional issues. Public Private partnerships. Do the purchases of Cyber Insurance know what they need and what they are getting? [Bonk: "Expectations"]. Climate Risk - Underserved communities, - Lessons of 2008 Financial Crisis - Inadequate oversight of Sales practices of Mortgages. Federal Regulators failed to rein in practices. Illustrations - Regulators aren't reining them in, use of Derivatives - AIG - Credit Default SWaps, Market Conduct Regulation vs. Financial Regulation. Conduct Risk threatens . Financial Stability requires market Conduct.
( - 1:24) - Moderator - Repeat of Birnys comments. - Last Questions to Frank - Cyber and Climate
(1:24- ) - Frank - Silent Cyber risk seems to be contained. Cyber Risk / Accumulation Risk - Huge. Cant compare to other risks. 46% of houses insured in Germany-???-Flooding
(1:27- ) - Moderator - Summary: Low interest Environment, viability of guarantees, moving away from them, Search for Yield (Frank-unreasonable/reasonable), Frank-interest rate, watch out from a Supervisory perspective. PE (Michael).