NEAM Insights

The treatment of securitisations in Europe has gained some publicity recently with updates coming from the EC and EIOPA on Solvency II. In this Quick Takes we review the changes and provide additional comments on our interpretation of the regulatory requirements of holding such assets on the balance sheet of an insurance firm. Read More

The Detroit municipal bankruptcy in 2013 was the largest in U.S. history, by far. Eighteen months and $170 million in legal fees later, the beleaguered city exited bankruptcy. Monetary losses were spread across creditors, including deep cuts for certain classes of bondholders. This landmark case offers a very public and large glimpse into the murky world of municipal bankruptcy. Read More

It is important for insurance companies to have well-grounded expectations for the coming year with respect to fixed income investment returns. In an effort to provide guidance to clients and others, we have used GR–NEAM’s proprietary return projection methodology to establish a realistic target for fixed income returns and a reasonable range of outcomes for fixed income portfolios of the U.S. P&C insurance industry for 2015. Read More

In September, the Federal Housing Finance Agency (FHFA) released a Notice of Proposed Rulemaking (NPR) proposing to revise its regulations governing Federal Home Loan Bank (FHLB) membership requirements while seeking to address what they view as issues related to the FHLBs’ housing finance mission. This Quick Takes outlines a brief history of the FHLB, our understanding of the NPR and how, if passed, the proposed changes may affect insurance companies going forward. Read More

The fall in Euro Area (EA) inflation during the last twelve months has been a surprise to policy makers and market participants alike. In addition to current headline inflation reading of slightly above zero—longer term inflation expectations have also declined. A lackluster growth/deflationary outcome would represent a significant medium term challenge to some EA sovereigns that still require de-leveraging and structural reform. Read More

Change is on the way for UK GAAP reporters with FRS 102 “The Financial Reporting Standard Applicable in the UK and Republic of Ireland” being adopted by the UK Financial Reporting Council (FRC) with effect from 2015. Read More

Interest rates will rise. Of that we are relatively certain. However, we are less certain regarding the start date, sequencing, severity and the sustainably of the increase. Insurers are accustomed to managing the uncertainty of insurance risks. How should they manage investment risk in an uncertain rising interest rate environment? Read More

Regulators have legislative responsibility to establish solvency standards for insurers. Rating agencies have a commercial interest in providing a framework to gauge insurers’ capital adequacy. For each the focus is to assign capital charges to the various activities of insurers, tally their accumulation and conclude either the need for regulatory intervention or assigning a financial rating, respectively. Read More

Executive Summary This issue of General ReView starts off with the highlights of the statutory operating and investment results and trends of the U.S. Life insurance industry for the last 10 years. The Portfolio Details’ section then focuses on fixed income sector trends and market statistics (durations, spreads, NRSO ratings, etc.). These historical market statistics are maintained by GR–NEAM in a proprietary database and are not publicly available. Read More

This is our 14th year of reporting on the U.S. property and casualty industry investment holdings. GR–NEAM’s database encompasses CUSIP holdings and their market statistics (durations, spreads, NRSO ratings, etc.) as of each year end since 2000. The year-end market statistics history cannot be replicated and we are unaware of it existing elsewhere. This enables GR–NEAM to provide greater depth of insurer portfolio analysis than what is otherwise available. Read More