Times Have Changed

Times have changed.

--  William T. Tozer, ACLI

1981 - SOA - Individual Life Insurance Cost Disclosure Issues, Society of Actuaries - 22p

  • (p53) - The life insurance sector, while safe and quite boring in the past, has changed meaningfully during the past two decades from a financial stability perspective.

2021 06 - Brookings - Task Force on Financial Stability, by Glenn Hubbard, Donald Kohn, Ralph Koijen, Blythe Masters - 135p

  • Richard Minck, ACLI... said the most striking change in life insurance in past years was in the non-guaranteed elements.

1994-1, NAIC Proceedings

  • The 1980s ushered in the era of universal life policies.
    • While such universal life policy features as flexible premiums, current and guaranteed cost of insurance scales, guaranteed maturity funds and guaranteed maturity premiums added a few wrinkles to the calculation process, the fundamentals of generating policy reserves remained fairly intact.
      • In contrast, today’s products have become much more complex.  (p11)

2013 01 - NAIC / CIPR Newsletter, By Reggie Mazyck, NAIC Life Actuary - 33p

  • Significantly, until the 1980s, no major life insurance company had failed during the working lifetime of most actuaries then in practice.
  • But as with so many aspects of the life and health insurance business, the last decade was, in many respects, a watershed.
    • Most of us have witnessed a revolution in the kind of products we offer, the way they are marketed, the investments made to match the liabilities they create, and the levels of profitability they generate.
  • As we have seen, the failure of such institutions as Baldwin United, and more recently Executive Life, First Capital and Mutual Benefit, have made us cogently aware of this issue.

--  Michael J. Cowell

1991 - SOA - Mandated Risk-Based Surplus, Society of Actuaries - 28p

  • We have witnessed very dramatic changes in the life insurance industry during the course of the 1980s.
    • No doubt, all of you could compile an extensive list of causative factors for these changes we have experienced.
  • Personally, if I were to make up a list, volatility in interest rates would be at the top.
  • I think this has created the need for the new wave of products that respond to changes in market interest rates and certainly the agent who is creating today's program.

--  Allan L. Chapman, a Senior Vice President with Executive Life Insurance Company in Los Angeles

1988 - SOA - Repricing Considerations -- In Force Blocks of Business, Society of Actuaries - 20p

  • Chapter 1, Life Insurance and the Question of Solvency Salvatore R. Curiale, Superintendent of Insurance, New York State Insurance Department
  • I am not sure there are any serious issues confronting the life insurance industry these days, unless of course you consider solvency, liquidity, junk bonds, deteriorating mortgage and real estate portfolios, risk-based capital requirements, asset mix, separate accounts, credit risk, Congressional inquiries, shrinking surplus, demutualization and more.
  • ⇒  What happened?
  • ⇒  How did a boring, straight-forward business become so interesting and so difficult to regulate?
  • During the past decade the life insurance industry has undergone dramatic changes.
    • A business that was  previously characterized by stable risks and generous profits has been transformed into one marked by instability of risk and evaporating profit margins.
  • The change was precipitated by the dramatic rise in interest rates in the late 1970s and early 1980s.
    • The relatively high rates offered by money market funds, Certificates of Deposit and other similar products prompted insurers to develop insurance alternatives that shifted the marketing emphasis from security to, at least partially, rate of return.

1993 - Book - Financial Management of Life Insurance Companies, edited by J. David Cummins

  • Historically, companies were reluctant to replace life insurance because they might be in violation of the "twisting" laws.
    • Times have changed.
  • In 1969, the National Association of Insurance commissioners developed the 1970 Model Life Insurance Replacement Regulation.
    • This removed most of the "twisting" fears. 

--  William T. Tozer, ACLI

1981 - SOA - Individual Life Insurance Cost Disclosure Issues, Society of Actuaries - 22p

  • Traditionally, actuaries have concentrated their attention on the liability side of the pension fund balance sheet, paying only limited attention to the other side, namely, the pension fund assets and their rate of growth.
    • While some actuaries may have discussed the potential impact of improved investment results on costs and/or benefits, few would have felt a responsibility to help plan sponsors seek means of improving performance.
    • Nor was there any demand for actuarial assistance in this area.
    • Indeed, until recent years few financial officers of corporations sponsoring pension plans paid attention to pension plan investment performance.
  • ⇒  Nowadays all this has changed.

--  Murray L. Becker

1973 - SOA - Investment Performance of Pension Plans, Society of Actuaries - 78p

  • ...the fact the Society of Actuaries is holding a meeting such as this, and is establishing an investment specialty section is certainly further indication of the changing nature of the investment side of our business.

--  Gary E. Wentlandt, Senior Vice President and head of the Securities Investment Division at Massachusetts Mutual

1987 - SOA - New Investments and New Investment Strategies, Society of Actuaries - 48p