NEAM Insights

European banks have been one of the weakest performing sectors of the equity market over recent years. We look at the sector from a credit perspective and show how a potentially stronger European Union (EU) post COVID-19, with greater levels of European fiscal integration, could positively impact this important asset class. Read More

The far-reaching Macron-Merkel European Union (EU) recovery plan gained considerable attention when it was announced on 18 May 2020 at a video conference in Paris. As heads of state of the EU’s two largest countries and premiers of the EU’s Franco-German twin engine, France’s President Emmanuel Macron and Germany’s Chancellor Angela Merkel were ideally placed to make such a bold proposal. Read More

The backdrop Higher education, which accounts for 6% ($30 billion) of the U.S. insurance industry’s municipal bond holdings,1 is among the capital market sectors acutely impacted by social distancing. While historically a relatively stable and well-performing sector (Chart 1), it was facing its share of longer-term headwinds even before COVID-19. Now, colleges and universities are dealing with a set of circumstances that is wreaking immediate havoc on students and administrators alike. Will the credit profile of U.S. colleges and universities be permanently damaged, or will COVID-19 simply be another mile marker in the evolution of the higher education sector? Read More

In June, for the second year running, NEAM Limited conducted its annual Lloyd’s Syndicate Investment Survey. In this article, we review the key investment trends for Lloyd’s syndicates as indicated by our survey respondents, examine these trends in the broader insurance sector context and highlight important considerations for Managing Agencies for the remainder of this year. Read More

CMBS transactions have been in the crosshairs of COVID-19 given the pandemic’s direct impact on commercial real estate. The retail and hospitality sectors have been significantly affected as a result of forced closures and reduced travel. Social distancing efforts have reduced the ability of organizations to conduct office operations, and many companies continue to implement work from home procedures. Read More

Executive Summary The Property & Casualty (P&C) insurance industry is arguably in the most uncertain position in recent memory. Seldom has the industry been faced with such fundamental challenges – ranging from a remote workforce and legislative and legal actions to weakened near-term demand. Read More

Introduction In May 2020, the Prudential Regulation Authority (“PRA”) released its supervisory statement SS 1/20 Solvency II: Prudent Person Principle (“SS 1/20”), which applies to all UK Solvency II firms, including Lloyd’s and its managing agents. The Prudent Person Principle (“PPP”) is fundamental to firms’ investment governance and operations, thus demanding the close attention of both the board and senior management. Read More

Executive Summary This issue of Perspectives discusses implications of investment choices as non-life insurers in the U.S. consider different measures of return and risk. Traditional accounting measures of investment performance such as yield and price return are generally intuitive, but alone may not provide a complete understanding of the risk and return characteristics of a portfolio. Read More

As we began 2020, the U.S. economy was on sound footing, albeit sporting an annual budget deficit of roughly $1 trillion. Now as we approach mid-year, the unemployment rate stands at ~15% and the deficit is set to explode to ~$4 trillion (and quite possibly higher) resulting from the massive economic rescue and support programs introduced to stem the economic dislocation caused by COVID-19. Read More

In previous writings,1 NEAM has called the insurance industry’s attention to the FHLB program. The benefits of the program are numerous and in these uncertain times, even more relevant. Insurance companies’ invested asset pools are not immune from the financial crisis being inflicted by social distancing measures taken to stem the spread of COVID-19. In times of market stress, characterized by increased volatility and declining asset prices, the ability to source another avenue of capital (albeit secured) without having to sell assets into dislocated markets can be advantageous. Read More