Asset Adequacy

44 Pages·2007·0.99 MB·English

The Work of the US Appointed
Actuary
Asset Adequacy
Robert M. Beuerlein, FSA, MAAA
President - Society of Actuaries
Overview
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Background
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Basic Mechanics
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Regulatory Requirements
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Professional Requirements
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Practical Considerations
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The Professional Appointed Actuary
Background
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1986 - Annuities - New York
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1992 - All Lines - All States
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Evolution through:
• Annual Valuation Actuary Symposium
• Updated Standards of Practice and Practice Notes
• Additional Regulatory Requirements
• Developments in US Marketplace
Valuation Actuary Symposium
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Sponsored by Society of Actuaries
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Attendance: 500-600 US Actuaries
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Topics
• Basic Skills
• Recent Developments
• Future Topics for Consideration
Standards of Practice &
Practice Notes
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Standards of Practice
• Original October 1993
• Revised 2001
• Reflect changes to regulations
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Practice Notes
• Updated periodically (2004 most recent)
• Reflect current practices
Additional Regulatory
Requirements
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Annual updates from certain states in October
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May be applicable in a few states
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May become industry norms after a few years
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Recently updated Actuarial Opinion Memorandum
Regulation (AOMR)
US Market Developments
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1970 - Par / Nonpar Life Insurance
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1980 - Universal Life - Risk Shifted
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1985 - Variable Universal Life - Equity Markets
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1990 - Preferred Risk Underwriting
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1995 - Six Underwriting Classes
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2000 - More Guarantees - Universal Life
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2005 - More Guarantees - Variable Universal Life
US Market Developments
1995-2005
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Shift from investment-type products
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Mortality driven products
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Competitive edge - multiple underwriting classes
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Shift to more guarantees
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Policyholders want more upside potential with less
downside risk
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More older age insurance
Basic Mechanics
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Asset Adequacy or Solvency Testing?
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Asset Adequacy Methods
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Model Development
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Level of Adverse Conditions
Asset Adequacy or
Solvency Testing?
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Asset Adequacy:
• Assets = Reserves and Liabilities
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Solvency Testing:
• Assets = Total Assets of the Company
= Reserves, Liabilities & Surplus