Risks – Page 9 – [BonkNote]

Pricing It’s tough to price in a very disciplined way when any fly-by-night company can come by and undercut you. Somebody could take a flier and come out with a product with a low rate and if it works out they benefit, if it doesn’t work out we pay the cost. — Michael Davlin 1985 -…

Disintermediation Run Disintermediation of traditional life insurance is most severe for policies sold as savings instruments. — George R. Dinney 1982 – SOA – Programs to Conserve Traditional Life Insurance Policies, Society of Actuaries – 18p When a policyholder feels deceived, the disintermediation potential is enhanced. — Allen D. Booth, a consultant in the Milwaukee office of…

Liquidity Risk We have a committee within the ACLI that has been looking into the whole liquidity question, and on the basis of those discussions, I believe there is much more liquidity in the industry today. If I recall correctly, the biggest surprise came about 15 years ago, when the first discussions were held with…

ALM – Asset Liability Matching Let me be elementary to begin. Asset/liability matching in its purest form likely means that we purchase assets such that whenever cash is needed to meet obligations, those assets will provide that cash. However, in the real world, we are going to be mismatched either because … we are not…

Bailouts 1920s/1930s – Great Depression 1980s – Federal Reserve 1990s – Executive Life, etc. 1992 0721 – Federal Reserve Report on Economy 03:38:22 SEN. RIEGLE And the banks got into big trouble. Not just the ones under your supervision, but the ones under the supervision of other regulators. And last year, we had to…

Risks Risk – Index Systemic Risk – Index … referred to the Report of the Committee on Valuation and Related Problems. In that report, the Trowbridge Committee identified three categories of hazards which may impair the financial health of the insurance enterprise. [C1, C2, C3] The report of the committee can be read by the…

Systemic Risk Systemic Risk – Index Assimilation of banking-type activities by life insurers appears to be the key systemic vulnerability. 2003 – IMF – Insurance and issues in financial soundness. IMF working paper 03/138. Das U, Davies N, Podpiera R – 44p 2009 0305 – GOV (House) – Perspectives on Systemic Risk, Paul Kanjorski (D-PA) — [BonkNote] Terri Vaughan…