Q: Are People Talking About the Same Thing?

2019 0917 – LIIIWG – NAIC – Life Insurance Illustrations Issues Working Group – Proceedings (Fall, 6-77) – Cost of Insurance

William Koenig (Northwestern Mutual) suggested that the parties all needed a common understanding of the terms used in their discussion. (p655)

1993-4, NAIC Proceedings - Life Disclosure Working Group – NAIC

(p25) - Mary A. WEISS (Academic): One other comment I might make is that it seems that when Dr. Vaughan and Mr. Schwarcz were talking about consumer affairs, it occurred to me that the conversation that was going on was at two different levels.

2011 0914 - GOV (Senate-Banking/SII) - Emerging Issues in Insurance Regulation, Senator Jack Reed (D-RI) --- [BonkNote]

Benefits
Costs
Non-Guaranteed Elements
Plan of Insurance
Premium

This is not a complete draft for consideration but merely an agreement that the words used express the intent.
This is regardless of one's approval or disapproval of the process-it is just to be sure that there are no ambiguities in the reading of the passage.
At least we can be sure we are talking about the same thing. (p432)

-- Letter from John T. Gilchrist, FSA to Douglas Doll, FSA, Chairman - Universal Life Insurance Task Force

1988-2, NAIC Proceedings

JESSE M. SCHWARTZ: Why are people so reluctant to call Total Life permanent insurance?
MYRON H. MARGOLIN: Universal Life type products are, I suppose, permanent.
- It is a semantic question whether they are permanent life or not, but clearly they are not the traditional cash value products as we have known them...

1981 - SOA - The Future of Permanent Life Insurance (rsa81v7n36), Society of Actuaries - 22p

2010 0526 - COP - Hearing - TARP and Other Government Assistance for AIG, Congressional Oversight Panel --- [BonkNote]
- Damon Silvers - (COP Member / policy director for the AFL-CIO)
- Tom Baxter - (General Counsel and Executive Vice President of the Legal Group, Federal Reserve Bank of New York)
- (p104-105) - GICS vs Swaps / CDS, State Guaranty funds vs Federal (ex. FDIC)

- (p219) - Damon SILVERS. What you’ve said is, is that—you said that all kinds of terrible things would have happened had they defaulted on the collateral posting obligations. But it was, but it’s the collateral posting obligations that were the triggering issue, right?
- Jim MILLSTEIN. (Chief Restructuring Officer U.S. Department of the Treasury): The collateral posting obligations were actually triggered by the downgrade. The downgrade——
- Mr. SILVERS. Yes, I know that. But that’s where the cash need was that week.
- Jim MILLSTEIN. I’m sorry.
- Mr. SILVERS. All the witnesses, all day long have said this.
- Jim MILLSTEIN. And the——
- Mr. SILVERS. You’re not disputing that.
- Jim MILLSTEIN. And the securities lending part——
- Mr. SILVERS. Right, exactly.
- Jim MILLSTEIN. They refused to roll over——
- Mr. SILVERS. Okay, so we all agree.
- Jim MILLSTEIN. Okay.

2009 0305 - GOV (House) - Perspectives on Systemic Risk, Paul Kanjorski (D-PA) --- [BonkNote] - re: 44 Billion, Securities Lending
- (p43) - Melissa Bean (D-IL) - My question is for Mr. McRaith: If the Federal Government had not stepped in to provide AIG bail-out money, how prepared were the State regulators and the reserve funds to deal with the fall-out?
  - How would the States have come up with the $44 billion of Federal tax dollars that had gone to shore up AIG Life Insurance subsidiaries who took risky bets through their securities lending programs that, notably, were approved by the State commissioners?
  - And a follow-up question to that, what resources have been put in place subsequently by you and other State commissioners to oversee an insurance subsidiary’s securities lending program?
- Mr. MCRAITH. Right. Thank you for that question, because securities lending has come up in other comments, as well.
  - It is important to understand that the problem—first of all, that the New York Department of Insurance was working to reduce the level of securities lending in the AIG subsidiaries before the crisis.
  - The crisis, remember, was a result of the—essentially, a collateral call on the AIG holding company, resulting from the credit default swaps.
    - This would not have been a problem, but for the CDS failure.
    - And it is also important to remember that the securities which were involved were AAA-rated securities at the time.
    - So it points to the need for better regulation of the credit default swap market. The—
- Ms. BEAN. So where would the $44 billion have come from?
- Mr. MCRAITH. Well, let me answer that.
  - I am going to get to that, but I want to—you also asked about reforms that have been undertaken.
  - We have increased capital requirements if companies are engaged in securities lending, enhanced reporting, and we are looking at how to revise our accounting standards, and that last improvement is ongoing.
  - In terms of $44 billion, it is important to understand that each insurer, of course, has significant capital require ments, to begin with.
  - Their assets cannot be used to satisfy the debts of the holding company.
  - Even if these subsidiaries—I think it’s an open question, also Congresswoman, whether if the—without the $44 billion, whether these companies would have actually become insolvent.
  - Many financial regulators will argue that they would not have been insolvent without the $44 billion, that they would have been okay.
  - However, if there had been a question of solvency, then the companies would have been placed into receivership.
  - And insurance is not like the FDIC, for example, where you need liquidity and cash immediately. Insurance, in the guaranty fund system, essentially replaces the contract.
  - They don’t have to—and the coverage.
  - They don’t have to generate cash immediately, because, of course, not everyone dies—God forbid, everyone dies—on the same day, or everyone has a car accident on the same day.
  - And, for this reason, $44 billion would not have been needed immediately if, hypothetically, it would have been needed at all.
    - It would have been managed over a period of many years, if not decades.
    - And this is what happens—and does happen—through the course of State-based receiverships of insurance companies.
    - The State-based system would have been able to handle it, and it would have been, again, a—protected the consumers, the policyholders, first.

2009 0315 - AIG Press Release - AIG Discloses Counterparties To CDS, GIA And Securities Lending Transactions - 6p
- Attachment D – Payments to AIG Securities Lending Counterparties - Use of Direct Support to AIG from 9/16/08-12/31/08
  - Total $43.7 Billion
Richard Scott - AIG - FCIC Interview - MP3 - {The counterparties would have just kept the securities.}

Justice Holmes once declared “that all contracts are formal, that the making of a contract depends not on the agreement of two minds in one intention, but on the agreement of two sets of external signs—not on the parties’ having meant the same thing but on their having said the same thing.”
- Oliver Wendell Holmes, The Path of the Law, 110 Harv. L. Rev. 991, 996 (1997) (reprint of address given at Boston University School of Law on January 8, 1897).

ca4.uscourts.gov/opinions/201187.P.pdf - Rowlands v - UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

Premium
UL
- Cash Value
  - (LIBG - Since 1996)
- Permanent
  - (NAIC/Common)
  - UL Model Regulation - (p-585-5)
    - Although highly flexible, universal life insurance is generally considered a permanent life insurance plan.
    - Most companies encourage a premium level which will provide lifetime insurance protection.
    - Every universal life insurance policy of which the drafters are aware has a “net level premium” that could be computed which would guarantee permanent protection.
    - As a result, it is expected that most universal life insurance policies will be sold as permanent plans.
- Whole
  - Brenda Cude
  - Gov - Consumer Handbook
  - UL Model Regulation - Could Be Configured as Whole
- Dynamic
  - Michael Lovendusky-ACLI
  - Actuarial Textbook
- Benefits Vary - AAA.