Commentary

#224 | The Tangled Reinsurance Web – Part 5 – The Power of Coinsurance

The tension between growth and capital is as old as time, but it takes on a unique dimension for life insurers. Most businesses view capital as a cushion to ride out temporary setbacks in the core business or to fund…

#223 | The Tangled Reinsurance Web – Part 4 – Coinsurance and Capital

As we’ve already seen, the power of coinsurance is that a life insurer can essentially borrow the economics of another life insurer within the defined confines of the reinsurance treaty. It’s not unlike what John and Jeremy, the protagonists of…

#222 | An Independent View of AG 49

One of the funny things about regulatory proceedings is that nothing happens – and then everything happens very, very quickly. The process to update AG 49 in light of growing market for Leveraged IUL has certainly followed this pattern. Back…

#220 | The Tangled Reinsurance Web – Part 3 – Coinsurance

For all of its subtleties, coinsurance is exactly what it sounds like – co-insurance. Both the direct writer and the reinsurer are on the hook for the liability, the reserves and the capital in proportion to the coinsurance agreement. But,…

#219 | The Tangled Reinsurance Web – Part 2 – YRT

If life insurance companies are a prism struck by white light, which represents the combined risks embedded in each policy they sell, then reinsurers specialize in particular parts of the light spectrum splaying out on the wall behind the prism.…

#218 | The Tangled Reinsurance Web – Part 1

COVID-19 has certainly changed a lot of things and one of them is that, for the first time in a long time, the question of mortality risk exposure for life insurers is suddenly on the table. This might seem like…

#211 | The Emerging Credit Event

Although most of the attention in the media has focused on the impact of the response to COVID-19 on equities, the proper functioning and pricing of credit is far more important for life insurers. The last two weeks have seen…

#208 | Taking Stock of the TNX

Although the public and the media are completely fixated by COVID-19 and the dramatic oscillations of the equity markets, we insurance folks are watching a different metric – the 10 Year Treasury yield (TNX). Since February 20th, the S&P has…

James Christie | Here We Go Again – With A Twist

The story currently playing out in the bond and equity markets seems eerily similar to what we saw in 2008 and 2009. Significant volatility in the equity markets combined with declining interest rates and rate actions by the Fed. In…

#205 | Charting New Territory

The market turmoil over the last week might not be unprecedented in and of itself, but it is producing some unprecedented results – and not in a good way for fixed and indexed insurance products. While equity drawdowns are obviously…

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