GALIC – General American Life Insurance Company

GALIC – General American Life Insurance Company

• 1936 December 1, 2, 3, 7, 8 – GOV (House) – Investigation of Real Estate Bondholders’ Reorganizations – Part 20 – Adolph J. Sabath (D-IL)   —   [BonkNote]
• MetLIfe
• Missouri
• Life Liquidity Risk Working Group – NAIC

• The Life Liquidity Risk Working Group arose from an interest in liquidity matters in 1999 by the Life and Health Actuarial Task Force relative to guaranteed investment contracts with bail-out provisions with increased interest subsequent to the General American insolvency.

2001 – SOA – Life Liquidity Risk, by Jon E. Niehus, stn-2001-iss17-niehus – Society of Actuaries – 2p

• The default by General American Life Insurance on $6 billion in funding agreements in 1999 led to a retrenchment in this market.
  • Buyers became concerned about credit risk, and sellers came under increased rating agency and regulator scrutiny.

2001 – SOA – Floating Rate Funding Agreements, rsa01v27n329pd – Society of Actuaries – 23p

• Summary: The sudden and unexpected default of General American has focused reviewed attention on liquidity management. General American was a large, highly-rated, and well-capitalized life insurer that defaulted on putable funding agreements that were issued to money-market funds.
• Topics: · What happened at General American and why did the regulators and rating agencies miss the problems?· Could something like this happen again? What was the impact of reinsurance? · What is the effect of adding institutional business such as putable funding agreements on liquidity management? · Are there prudent levels of this business that can be beneficial? · What is the effect of funding agreements with downgrade provisions on liquidity risks, and do such provisions create a preference for sophisticated institutional contract holders?

2001 – SOA – Floating Rate Funding Agreements, Society of Actuaries – 23p