NEAM Insights

This General ReView marks our 15th year of reporting on U.S. property/casualty (P&C) industry investment holdings. We are taking a slightly different approach this year by releasing three editions of the report. The first highlights overarching trends, while the second and third will delve deeper into several of the key issues. As in the past, companion pieces will follow for the life insurance industry. Read More

Interest rates are low, equity markets are volatile and both are likely to remain so. Purveyors offering favorable, even “superior,” returns from alternative investments are energized. However, their motivations may not align with the best interests of their customers. Read More

Stress testing is a critical component of insurers’ enterprise risk management framework. Boards, managements, regulatory and rating agencies and other stakeholders have an expectation that organizations assess the “consequence of being wrong” in the formulation of their business strategies and the execution of operating plans.1 There is the need to distinguish between the willingness to take risk and the capacity to absorb risk. The former is aspirational and can be reviewed in various constituent communications. The later becomes a fact proven only by the resiliency of the enterprise to recover from adverse events. 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

Introduction This is the second year GR–NEAM has performed a market analysis of publicly-traded, Bermuda domiciled insurers. Our goal is to highlight the peer group’s Financial and Stock Market Performance, Investment Performance, and Underwriting Performance. Additional analysis depicting firm-by-firm results and additional research will be forthcoming. Read More

Enterprise Value-at-Risk (VaR) remains relevant as a key metric in solvency assessment and insurer capital adequacy measurement by regulators in Solvency II regimes. More broadly, including the United States, as companies continue to develop their internal economic capital models, VaR is a reference statistic to adjudicate modeled outcomes. In addition, as a competitive assessment tool, VaR metrics can be insightful for benchmarking performance. In all instances, the need for a singular metric comparable across industry segments and geography will increase, as will the need for transparency and uniform methods of estimation. Read More

Despite the historically low interest rate environment, 2012 turned out to be another year with favorable statutory operating results for the U.S. Life insurance industry. Although operating under challenging and competitive markets, Life companies continued to search for investment opportunities to enhance their risk-adjusted return. Read More