Actuaries need to update estimates, contribute to the discussion on appropriate bonus levels and help make calls on new and existing products and pricing. There is usually more than enough uncertainty and we’ve developed a set of tools and heuristics and ways to go about this under normal conditions. What happens when the conditions are …
Continue reading “Guidance for actuaries making decisions with Covid-19”
What does Business Rescue mean for credit risk, ratings and cross-default? Business Rescue precludes creditors from applying for liquidation of the business. This is the removal of an existing right of lenders: “a temporary moratorium on the rights of claimants against the company or in respect of property in its possession” From what I gather …
Infrastructure as an asset class is hardly a new idea. Retirement funds are attracted to the promise of higher turns, long-dated cash flows, and consistency with increasingly important ESG factors. Insurers, unlikely retirement funds, have to hold risk-based capital against the risks inherent in their investments. This makes it more difficult to underestimate the risks …
Continue reading “Capital implications of infrastructure assets for insurers under SAM”
I love analogies. As analogies go, many things are well approximated by the “toss of a coin”. Gender at birth is not. And it’s not for two reasons, only one of which you can probably guess. The sex ratio at birth is not 1 boy to 1 girl. As of 2017, according to World Bank …
Setting discount rates is a crucial and subjective exercise. This is true for life insurance embedded values too. Many researchers are comfortable with a range for Equity Risk Premiums of between 3% and 5%. Many corporate finance practitioners use a range from 5% to 8% or even higher. My nearly eight-year-old blog post on mis-estimating …
Expectations of future UK life expectancy have declined for several years now. This is not to say that current life expectancy has decreased, but rather than estimates of future mortality improvements are being lowered, pushing down future estimated life expectancy. One report indicates this change may roll back a year of expected mortality improvements. So …
Life expectancy is one of those funny measures with a cavernous gap between those who think they understand it and those who do. The latest controversy arose a few days ago a year ago (this post has been in draft for a long time…) because Russia is planning to increase the normal retirement age from …
Reading the Financial Soundness Standards for Insurers (FSIs) is an exercise that can only end in madness. I’m sufficiently familiar with them now that I mostly refer back to them for particularly tricky or thorny issues. Without fail, the words fail to clearly communicate exactly what was intended. Take ancillary capital as an example. To …
