All articles by LII editorial
LII editorial
New York gets tough on insurers
New York gets tough on insurers Eric Dinallo, superintendent of the New York State Insurance Department (NYSID) is taking no chances that insurers under his jurisdiction will spring any more unpleasant surprises. In the first part of a two-part strategy to ensure stability, the NYSID has announced that it will undertake on-site reviews lasting between one to two days of insurers financial stress testing and scenario analyses processes.
Big challenges face foreign insurers
Big challenges face foreign insurers Chinas life insurance industry has set a cracking growth pace and, assisted by the full backing of the countrys government, looks set to deliver more of the same in the years ahead In 2000, Chinas life insurance industry ranked as the worlds 18th largest based on total premium income of RMB99.8 billion ($12 billion at the then prevailing exchange rate)
Lifecycle fund asset confusion
Lifecycle funds, also termed target date funds, represent a fast growing market in the US driven primarily by defined contribution pension scheme members seeking a seemingly simple yet effective solution Indicative of their popularity, industry body the Investment Company Institute reported that total assets in lifecycle funds soared by 61 percent in 2007 to $133 billion, of which 88 percent was held in retirement accounts
Image of property funds lies in tatters
Image of property funds lies in tatters In September 2004 one of the UKs top-five life insurers assured investors that commercial property funds carry only slightly higher risk than bonds. Just over two years later the doors of many commercial property funds were being slammed shut, some for up to 12 month following an avalanche of withdrawals
Equity release draws an ever-younger client base
Equity release draws an ever-younger client base Extracting capital from a residential property by way of a loan that need only be repaid when the property is sold or out of the borrowers estate after death equity release is gaining acceptance among pre-retirees in the UK
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Taking a close look at non-disclosure
Though honesty may be the best policy, this does not appear to be a sentiment shared by the 1.5 million life insurance policyholders in the UK that AXA estimates to be at risk of having a claim rejected. These policyholders 7 percent of the total number in the UK have put themselves at risk by knowingly having misled insurers when completing application forms in a quest for what AXA terms a desire for the perfect insurance self.
The long road to optimum ERM
It is starkly evident that certain life insurers, banks and other financial services companies have experienced far more severe financial damage at the hands of the US subprime residential mortgage debacle than others A recent study by the Senior Supervisors Group (SSG) concluded that the reason lay in variations in the levels of adherence to effective enterprise risk management (ERM) In its finding the SSG, which comprises US, UK, French, German and Swiss supervisory agencies, stressed that as a result of poor ERM many companies failed to react to an array of data indicating rising stress in the sub-prime mortgage market.
Skandia UK turns its back on the ABI
In a surprise move, Skandia UK announced on 3 November that it is ending its membership of the Association of British Insurers (ABI), an industry body with some 400 members that between them provide 94 percent of domestic insurance services in the UK A unit of UK-domiciled life insurer Old Mutual, Skandia UK had total assets under management of £39.5 billion ($62 billion) at the end of June 2008. Rationale for Skandia UKs decision is based on its view that the position adopted by the ABI and many of its members on the issue of financial advice is wrong and will undermine the role of independent financial advisers (IFA).
Prudential gets Saudi Arabian asset management go-ahead
In a significant development in what it termed an ambitious expansion plan in the Gulf region, UK insurer Prudentials Asian asset management unit Prudential Asset Management (PAM), has received approval from Saudi Arabias Capital Market Authority to establish an asset management company The new company will be formed as a joint venture with Saudi Arabian bank Bank AlJazira and is to be named Prudential Jazira Asset Management. In addition to asset management the new venture will incorporate Bank AlJaziras takaful (Islamic Sharia law compliant) insurance business.
Growing pressure on US insurers to enhance management systems
Watson Wyatts view is based on what it termed significant change in the financial reporting environment, driven by the movements toward an international reporting standard and toward principles-based approaches to setting reserves and capital for US life insurers The consultancy pointed out that at the same time regulations are changing, risk measurement and management demands are becoming more complex and, indeed, some insurers may find that their existing systems are a source of risk that needs attention. Increasingly, there is a competitive advantage for executives who are able to undertake a sophisticated analysis of their companys performance and explain it to stakeholders, said Buck