This document discusses the role of actuaries in reinsurance and capital markets convergence, specifically regarding insurance-linked securities (ILS). ILS allow insurance risks to be transformed into tradable capital market products. The global ILS market is growing and expected to reach 20% of reinsurance capacity by 2015. Actuaries are currently involved in ILS through risk analysis, pricing, reserving, portfolio management, and third party reviews. The document argues actuaries have expertise that can further support areas like ILS valuations, premium estimates considering seasonality and re-modeling, and claims estimates regarding recognition timing and attritional versus catastrophe losses.
Alternative risk transfer is the use of techniques other than traditional (re)insurance that provide risk-bearing entities with protection from risks of loss. The presentation shows current and prospective involvement of actuaries in the (re)insurance and capital market convergence.
Alternative risk transfer is the use of techniques other than traditional (re)insurance that provide risk-bearing entities with protection from risks of loss. The presentation shows current and prospective involvement of actuaries in the (re)insurance and capital market convergence.
The Renaissance of Stable Value: Capital Preservation in Defined ContributionCallan
*Stable value funds are low-risk investment options in participant directed plans that mix capital preservation with return generation. They invest in high-quality, short- and intermediate-duration fixed income securities, and utilize wrap contracts to insulate individual plan participants from market value fluctuations.
*Stable value funds serve as an alternative to more volatile or risky asset classes and are a direct substitute for a money market fund. They typically offer a more attractive yield than money market funds, except during periods when short-term rates are rising rapidly.
*This paper describes how the underlying mix of securities and issuer characteristics have evolved since the financial crisis, and why Callan sees stable value as a healthy and important part of the U.S. retirement plan marketplace.
Introduction
In this paper, we seek to answer questions defined contribution (DC) plan sponsors and their participants may have about stable value funds, including mechanics, instruments, liquidity, and implementation considerations. We also look at risk and performance, address benchmarking issues, cover recent trends, and provide key takeaways for DC plan sponsors.
Stable value funds are popular with DC plans and 529 college saving investors. According to Callan’s DC Index™, 65% of DC plans offer a stable value fund, and typically 14% of total plan assets are in such funds when offered.
We believe stable value can be an effective investment option for DC plan participants seeking capital preservation.
Capital Adequacy Standards and Bank Capitalcatelong
For banks these questions are answered:
*What is capital, what role does it play?
*How is capital measured?
*How much capital is desirable?
*How does capital influence bank behaviour?
Presented at the Enhancing Risk Management and Governance in the Region’s Banking System to Implement Basel, II and to Meet Contemporary Risks and Challenges Arising from the Global Banking System, APEC, 8th December - 12th December, 2008
Asset intensive reinsurance has been a hot topic in the marketplace, in particular reinsurance for fixed annuities, variable annuities and indexed annuities.
With variable annuities in particular, the products have been written recently specifically combat the difficulties posed by the low interest rate environment. With GAAP ROEs as healthy as ever, solution providers (banks/reinsurers) are looking to enter into the variable annuity reinsurance market to get their "share of the pie".
The asset intensive reinsurance world is evolving rapidly, and I will be presenting this evolution for certain high-profile products during the Valuation Actuary Symposium on 8/31 at 10:00 AM.
Hope to see many of you friendly faces there!
The Renaissance of Stable Value: Capital Preservation in Defined ContributionCallan
*Stable value funds are low-risk investment options in participant directed plans that mix capital preservation with return generation. They invest in high-quality, short- and intermediate-duration fixed income securities, and utilize wrap contracts to insulate individual plan participants from market value fluctuations.
*Stable value funds serve as an alternative to more volatile or risky asset classes and are a direct substitute for a money market fund. They typically offer a more attractive yield than money market funds, except during periods when short-term rates are rising rapidly.
*This paper describes how the underlying mix of securities and issuer characteristics have evolved since the financial crisis, and why Callan sees stable value as a healthy and important part of the U.S. retirement plan marketplace.
Introduction
In this paper, we seek to answer questions defined contribution (DC) plan sponsors and their participants may have about stable value funds, including mechanics, instruments, liquidity, and implementation considerations. We also look at risk and performance, address benchmarking issues, cover recent trends, and provide key takeaways for DC plan sponsors.
Stable value funds are popular with DC plans and 529 college saving investors. According to Callan’s DC Index™, 65% of DC plans offer a stable value fund, and typically 14% of total plan assets are in such funds when offered.
We believe stable value can be an effective investment option for DC plan participants seeking capital preservation.
Capital Adequacy Standards and Bank Capitalcatelong
For banks these questions are answered:
*What is capital, what role does it play?
*How is capital measured?
*How much capital is desirable?
*How does capital influence bank behaviour?
Presented at the Enhancing Risk Management and Governance in the Region’s Banking System to Implement Basel, II and to Meet Contemporary Risks and Challenges Arising from the Global Banking System, APEC, 8th December - 12th December, 2008
Asset intensive reinsurance has been a hot topic in the marketplace, in particular reinsurance for fixed annuities, variable annuities and indexed annuities.
With variable annuities in particular, the products have been written recently specifically combat the difficulties posed by the low interest rate environment. With GAAP ROEs as healthy as ever, solution providers (banks/reinsurers) are looking to enter into the variable annuity reinsurance market to get their "share of the pie".
The asset intensive reinsurance world is evolving rapidly, and I will be presenting this evolution for certain high-profile products during the Valuation Actuary Symposium on 8/31 at 10:00 AM.
Hope to see many of you friendly faces there!
A credit derivative is a financial contract in which the underlying is a credit asset (debt or fixed-income instrument). The purpose of a credit derivative is to transfer credit risk (and all or part of the income stream in relation to the borrower) without transferring the asset itself.
A credit derivative serves as a sort of insurance policy allowing an originator or buyer to transfer the risk on a credit asset (of which he may or may not be the owner) to the seller(s) of the protection or counterparties.
Financial Operations conducted by Insurers to ensure the profitability of the insurance company and maximizing of sales of insurance products and paying claims back in case of a loss.
Retirement income strategies during volatile and uncertain marketsnetwealthInvest
Michael Elsworth, Executive Director at Lonsec, joins us to discuss retirement income strategies during volatile markets, including his investment philosophy, the benefits and risks of different retiree income strategies and the advantages of combining income streams during times of uncertainty.
The Evolution of Non-Banking Financial Companies (NBFCs) in India: Challenges...beulahfernandes8
Role in Financial System
NBFCs are critical in bridging the financial inclusion gap.
They provide specialized financial services that cater to segments often neglected by traditional banks.
Economic Impact
NBFCs contribute significantly to India's GDP.
They support sectors like micro, small, and medium enterprises (MSMEs), housing finance, and personal loans.
how can i use my minded pi coins I need some funds.DOT TECH
If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
i will leave the telegram contact of my personal pi merchant below. 👇 I and my friends has traded more than 3000pi coins with him successfully.
@Pi_vendor_247
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
Exploring Abhay Bhutada’s Views After Poonawalla Fincorp’s Collaboration With...beulahfernandes8
The financial landscape in India has witnessed a significant development with the recent collaboration between Poonawalla Fincorp and IndusInd Bank.
The launch of the co-branded credit card, the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card, marks a major milestone for both entities.
This strategic move aims to redefine and elevate the banking experience for customers.
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
Introduction to Indian Financial System ()Avanish Goel
The financial system of a country is an important tool for economic development of the country, as it helps in creation of wealth by linking savings with investments.
It facilitates the flow of funds form the households (savers) to business firms (investors) to aid in wealth creation and development of both the parties
where can I find a legit pi merchant onlineDOT TECH
Yes. This is very easy what you need is a recommendation from someone who has successfully traded pi coins before with a merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi network coins and resell them to Investors looking forward to hold thousands of pi coins before the open mainnet.
I will leave the telegram contact of my personal pi merchant to trade with
@Pi_vendor_247
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
Actuarial Opportunities in Reinsurance and Capital Market Convergence
1. A ROLE FOR ACTUARIES IN REINSURANCE
AND CAPITAL MARKET CONVERGENCE
SOA Annual Meeting – October 2015
Achille Sime, FIAF FSA MAAA CERA
CEO of SL FINANCIAL, Inc.
asime@sl-financial.com
2. CONFIDENTIAL
Disclaimer
This presentation was prepared by SL FINANCIAL for use
in marketing or industry presentations.
Information contained herein is believed to be reliable,
but SL FINANCIAL does not warrant its completeness or
accuracy.
Opinions and estimates constitute our judgment and are
subject to change without notice.
This material is not intended as an offer or solicitation for
the purchase or sale of any financial instrument.
3. CONFIDENTIAL
Table of Contents
Insurance-Linked Securities (“ILS”) Universe
• Introduction
• Market Size
• Types of Transaction
Impact on Reinsurance Industry
• Disruptive Innovation
• Evolving Business Models
Actuarial Involvement in ILS
4. CONFIDENTIAL
ILS Universe: Introduction
What is Alternative Risk Transfer (“ART”)?
• Use of techniques other than traditional (re)insurance to protect risk-
bearing entities from risk of loss
• ART market began in the 1990’s in effort to expand insurers’ ability to
transfer peak insurance risks
• Objective: attract non-traditional capital willing & able to absorb
insurance risk uncorrelated to existing portfolios while seeking
favorable returns
What is Insurance-Linked Securities (“ILS”)?
• Financial instruments whose values driven by insurance loss events
• Generic term referring to transactions in which insurance risks are
transformed into transparent and tradable capital market products
• Also referred to as Alternative (Capital Market) Reinsurance
5. CONFIDENTIAL
ILS Universe: Market Size
ILS market expected to reach 20% of global reinsurance
capacity in 2015
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Issued$m
Catastrophe bonds and ILS cumulative issuance by year
Source: www.artemis.bm Deal Directory
6. CONFIDENTIAL
ILS Universe: Market Volume (Non-life)
0
10
20
30
40
50
60
70
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Issued$B
Collateralized Reinsurance Collateralized ILW Sidecars Cat Bonds
63.8
49.7
44.0
27.5
23.6
22.3
18.9
21.8
17.1
10.5
8.4
7.4
5.4
Source: Aon Benfield Securities, Inc.
As of December 31, 2014
Non-life alternative reinsurance has increased 28% since
year-end 2013 to US$63.8B
7. CONFIDENTIAL
ILS Universe: Types of Transaction
A risk-linked debt security that transfers a
specified form of catastrophe risk from a sponsor
company to investors
Catastrophe
Bonds
Collateralized
ILW’s
Collateralized
Reinsurance
Sidecars
A fully collateralized Industry Loss Warranty,
which is a contract that pays out for events
greater than a pre-defined loss threshold
A reinsurance agreement that is fully collateralized,
typically by unrated third party capital
A limited purpose company created to assume a
pre-defined portion of insurance policies from
an issuing insurance carrier
•High Layers
•Low EL*
•Low ROL*
•High Liquidity
* EL: Expected Loss
ROL: Rate-on-Line
•Working
Layers
•Low Liquidity
•Retention
•High EL
•High ROL
•Low Liquidity
8. CONFIDENTIAL
ILS Universe: Catastrophe Bond Structure
Special Purpose Vehicle (“SPV”)
established to write a reinsurance
agreement
• Entity exists solely to write the specific
transaction
Investors purchase bonds issued by
the SPV
• Investors receive interest income on the
invested funds plus a premium (interest
spread) for the risk assumed
• Funds raised collateralize the reinsurance
agreement (i.e. limited credit risk)
No Loss Events
• Principal repaid to investors with interest
Loss Events
• Insured (sponsor) has transferred
catastrophe risk and receives loss
payment from the SPV
• Insufficient funds in the SPV to fully repay
investors (i.e. full or partial default)
Ceded
Premium
Sponsor
(Re)insurance Co.
Issuer:
Special Purpose
Vehicle (SPV)
Collateral
Trust Account
Collateral
Management
Options:
a. High Quality Securities
b. Level of Investment Risk
Investors
Principal At-Risk
Variable Rate
Notes
Remaining Principal
Note Proceeds
Reinsurance
Contract
Coupon
(LIBOR + Spread)
9. CONFIDENTIAL
ILS Universe: Collateralized Re Structure
Special Purpose Vehicle (“SPV”)
established to transform insurance
risks into capital market products
• Typically licensed reinsurance company
with segregated account (“cell”) structure
Some advantages of cell structure:
• Less expansive than separate reinsurance
• Investors are non-voting shareholders
• Easier to unwind than stand-alone
company
Investors purchase non-voting
preferred shares in the SPV
• Funds raised collateralize the reinsurance
agreement (i.e. no credit risk)
• Investors receive dividends and remaining
funds
• Allow direct investment into (re)insurance
Reinsurance Co.
(cell)
Transformer:
Special Purpose
Vehicle (SPV)
Collateral
Trust Account
Collateral
Management
Options:
a. High Quality Securities
b. Level of Investment Risk
Investors
Remaining Funds
Preferred Shares
Dividends
Sponsor
(ceding co.)
Ceded Premium
Reinsurance Contract
Counterparty
Contract
10. CONFIDENTIAL
ILS Universe: Sidecars
Holding company own 100%
of the sidecar
• Capital structure typically include
Equity and Debt
Sponsor buy reinsurance
coverage
• Common for property and marine
catastrophe risks
• Usually via a quota share
reinsurance agreement
• Receives commissions and fees
(override and profit commission)
• transaction typically has a limited
lifespan
Sidecar
Holdings
Sidecar
Reinsurance Co.
Collateral
Trust Account
Sponsor
(Ceding Co.)
Debt
Investors
Loan Proceeds
Interests
Equity
Investors
Equity Proceeds
Dividends
Equity
ProceedsDividends
Ceded
Premium
Reinsurance
Contract
Security Interest in
Shares
11. CONFIDENTIAL
Impact on Reinsurance: Disruptive Innovation
Traditional reinsurance employs leverage
• Reinsurers write policies whose losses are multiples of capital in
balance sheets (“levered” balance sheets)
• Leverage is accepted as part of business plan through diversification,
risk management and credit rating
Securitization eliminates leverage via full collateralization
• Securitized risk hold cash and liquid securities equal to full limit of
coverage
• Thus reduces credit risk and makes liquid trading possible
At simplest insurance securitization is change in capital
structure:
• From levered to unlevered (collateralized) balance sheet
• From managing to hedging the risks
12. CONFIDENTIAL
Impact on Reinsurance: Evolving Business Models
Evolving Business Models Key Risk
Strategies
Main Attributes
Superior scale: globally big and
knowledgeable
Underwriting Capital and pricing efficiency
Nimble innovator: uses analytics and
expertise
Underwriting Platform flexibility and superior customer
understanding
Llyod’s: combines depth and breadth
with expertise
Underwriting Creativity and innovation within small
structure & global licenses
Hedge-fund Re: accumulates (large)
stable funds to deliver superior
investment returns
Asset Careful targeted risk selection with low
volatility
Risk transformer: specialist capital
market funds
Fee income Channel investments into reinsurance
while providing capital efficiency &
transparency
Direct: partners with client to provide
targeted capital market protection
Underwriting Provides cost-efficient capital market
protection against discrete risks
Source: PwC Reinsurance 2020 & personal experience
13. CONFIDENTIAL
Actuarial Involvement in ILS
Factors influencing actuarial involvement in ILS:
• Transparency: Net Asset Value (“NAV”) published on monthly basis
• Independence: Investors’ demand for independent third-party review
• Credit rating agencies (“CRA”) and regulators prospective:
o Assessors of creditworthiness and policyholders security
o CRA used in structured finance to rate but also advise on structure
o Actuarial work products is KEY rating factors (e.g. ratemaking and reserving)
NAV is an assessment of fund’s Fair Value (“FV”)
• 𝐹𝑉 𝑡 ≈ 𝐶𝑜𝑙𝑙𝑎𝑡𝑒𝑟𝑎𝑙 + 𝑃𝑟𝑒𝑚𝑖𝑢𝑚
𝐹𝑉 𝐴𝑠𝑠𝑒𝑡𝑠
− 𝑃 𝑡
𝐹𝑉 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
• 𝑃 𝑡 is premium that rational risk taker charge at t to assume all risks
o 𝑃 𝑡 ≈ 𝐿𝑜𝑎𝑑𝑖𝑛𝑔 𝑡 ∗ 𝐸 𝑋|𝐿(𝑡) with 𝑃 0 = 𝑃𝑟𝑒𝑚𝑖𝑢𝑚
o 𝐿 𝑡 = 𝑈𝑙𝑡𝑖𝑚𝑎𝑡𝑒 𝑙𝑜𝑠𝑠 𝑜𝑛 𝑒𝑎𝑟𝑛𝑒𝑑 𝑒𝑥𝑝𝑜𝑠𝑢𝑟𝑒
14. CONFIDENTIAL
Actuarial Involvement in ILS (cont.)
Summary of current actuarial involvement in ILS
• Actuarial risk analysis and pricing at inception
• Revenue recognition according to seasonal earning of premium
• Actuarial loss reserving related to estimating 𝐿(𝑡)
• Actuarial pricing related to estimating 𝑃(𝑡)
• Portfolio risk management (e.g. track UW guidelines or risk metrics)
• Collateral release and commutation (e.g. procedure for establishment
and run-off of reserves)
• Service provider (e.g. loss reserve specialist, calculation agent, peril
modeler, etc.)
• Third party valuation review
• Education (…)
15. CONFIDENTIAL
Actuarial Involvement in ILS (cont.)
Summary of current actuarial involvement in ILS
• Financial analysis & reporting
• Traditional actuarial loss reserving
• Traditional actuarial pricing & modeling
Some actuarial consideration in ILS valuations
• Premium Estimate
o Modeled vs. Un-modeled
o Seasonality earnings
o Remodeling after loss occurs & consideration for aggregate XOL contracts
• Claims Estimate
o Timing of recognition (expected, actual or modeled)
o Attritional vs. Catastrophe
o Reserving process and governance issues