NEAM Insights

Executive Summary To understand how life insurers have fared through this prolonged low yield environment, we have published a series of studies1 that review the life industry’s net investment spreads. Principally, these spreads are the difference between “earned” rates from assets versus “paid/credited” rates to insurance contracts.2 Read More

Executive Summary The U.S. life insurance industry broad sector allocations remained stable, with bonds and mortgage loans combined representing 85% of the allocation. Allocations to alternative (Schedule BA) assets reached a new high in 2019, but are predominately owned by large organizations. Read More

EXECUTIVE SUMMARY The U.S. P&C insurance industry continued to experience declines in investment returns. The recent pandemic crisis and Central Bank actions have created an even more demanding environment for P&C insurers to navigate underwriting uncertainties and investing challenges. 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

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

We choose the topic of Goodwill for this Perspectives for several reasons. First, for insurance organizations which are Generally Accepted Accounting Principle (GAAP) filers it represents a component of reported equity. Second, the Coronavirus-19 and recent capital market volatility will adversely impact insurers’ GAAP and statutory operating results and capital positions. And third, the Financial Accounting Standards Board (FASB) comment period on the current goodwill accounting framework has expired and results are pending. Read More

In this Perspectives, we explore the realignment of insurance product portfolios and the asymmetric behavior of asset returns and property/casualty underwriting margins on both asset allocation and enterprise outcomes. We find realigning insurance product portfolios can favorably impact enterprise results. Further, product realignment can enhance the earnings contribution of asset reallocation. Read More

Introduction In this Perspectives, we explore the utilization of asset allocation and reinsurance to achieve enterprise de-risking. We find asset reallocation combined with reinsurance to be the most effective means to manage an insurer’s return/risk profile following a more holistic enterprise-based framework. We believe there are few true caveats to the findings; however, several admonitions are offered impacting applications to individual companies. Read More

Introduction This issue of Perspectives highlights some of the recently proposed and implemented changes to ratings methodology and regulatory standards for insurers. For example, AM Best announced an innovation score in their financial strength ratings process. Additionally, Standard & Poor’s (S&P) broadly revamped its ratings methodology for insurers and modified how certain risk capital requirements will apply to financial guarantors. Read More

A cursory view of industry results presents a picture of improvement: Read More