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Near the end of each calendar year, mutual insurance companies declare their dividend interest rates (DIRs) on participating whole life (WL) insurance policies for the following year.
Our latest M Intelligence piece provides information on the elements that drive changes in DIRs—as supported by historical DIR results, insurance company asset allocations, and investment returns.
An example of how we analyze potential investment ideas using a mix of qualitative and quantitative methods. In this case a look at the high-grade tax-exempt bond market and closed-end funds of tax-exempt debt.
Etude PwC 2013 sur les fusions-acquisitions dans le secteur des assurancesPwC France
http://pwc.to/16IfpG5
Ce nouveau rapport de PwC met en évidence la reprise des fusions-acquisitions dans le secteur de l’assurance, dont l’importance stratégique commence à augmenter à travers le monde.
- Merrill Lynch may have conflicts of interest due to business relationships with covered companies that could affect research report objectivity. Investors should consider this report as one factor among many.
- Independent, third-party research is available to Merrill Lynch customers in the US at no cost if such research exists for covered companies.
- The document provides analysis on risks to trust banks and asset managers from a potential US recession and equity market correction, but concludes both groups should continue outperforming the S&P 500 and credit-sensitive financials in the near-term. Selectivity is key among asset managers at this point.
Here is how I would arrange those in order of importance:
1. Income in Retirement
2. Long Term Care
3. Death Benefit
My reasoning is:
Income in retirement is most important as it allows you to financially support yourself once you stop working. Having a reliable source of income to cover living expenses should take priority.
Long term care is the next most important since the costs of care can be substantial if needed for an extended period of time. Having a way to pay for care, whether at home or in a facility, is very valuable.
A death benefit is least important on the list. While providing funds to loved ones after passing is good to have, it is not as
The document provides an analysis of Land Securities Group PLC, a UK property company. It includes the following key points:
- Land Securities is the largest property company in the UK by market capitalization and is a member of the FTSE 100.
- The analysis estimates the cost of equity for Land Securities to be 6.78% based on the company's beta of 0.9 calculated from its market model, a market risk premium of 5.2%, and a risk-free rate of 2.1%.
- Using the dividend valuation model with a dividend growth rate of 2.6% and the estimated cost of equity, the document values Land Securities' share price at £0.782, which
- The Alchemy Capital Management investment fund suffered losses in the fourth quarter of 2007 from hedge fund failures and the effects of the credit crunch. Approximately 40% of the fund's allocation was directly or indirectly linked to credit markets.
- Looking ahead, the fund has reduced its exposure to credit and illiquid securities to below 10% and increased diversification to more market neutral and arbitrage strategies. Volatility is expected to remain high given continued uncertainty in the markets.
- As of January 2008, the fund's strategy allocation was approximately 22.5% in long/short equity, 46% in market neutral, arbitrage and event driven strategies, and the remainder in multi-strategy, global macro, emerging markets and
The newsletter discusses quarterly investment performance and market outlooks across various asset classes. It provides commentary from investment managers on the performance of equities, fixed income, and specific funds. It also discusses using target date ETFs and the Lyrical U.S. Value Equity Fund as part of a blended bond strategy and highlights their differentiated investment approach.
The use of risk management products has grown tremendously in recent years and companies now employ large numbers of risk managers. A fundamental notion underlying these risk management practices is that cash flow and earnings volatility are harmful to shareholders—that is, these measures of volatility have a direct impact on the company’s stock price. If so, risk management tools that lower this volatility will benefit shareholders by raising the company’s stock price. In designing risk management programs, therefore, it is essential that managers have an understanding of the degree to which the market rewards the company’s stock price when cash flow and earnings volatility are lower. That is, CFOs need a market-
based measure of the benefits of reducing volatility through risk management practices.
In this paper, we provide evidence on whether companies with lower volatility are more highly valued than those with greater volatility. Our main findings are as follows:
Valuation multiple is substantially higher for companies with lower earnings per share (EPS) volatility. For example, a movement from the 75th percentile of EPS volatility to the 25th percentile increases the observed market-to-book (M-B) ratio from 1.15 to 1.32 (i.e., an increase of 15%).
Similarly, valuation multiple is significantly higher for companies with lower cash flow volatility. For example, a movement from the 75th percentile of cash flow volatility to the 25th percentile increases the observed market-to-book (M-B) ratio from 1.21 to 1.23.
Once we control for other determinants of the M-B ratio in a multivariate regression framework, we continue to find that cash flow volatility and earnings volatility have an economically meaningful impact on company value. All else equal, 10% reductions in EPS volatility and cash flow volatility are associated with increases in M-B ratios of 1.6% and 0.6%, respectively. Reductions in EPS volatility and cash flow volatility of 50% are associated with increases in M-B ratios of 11.2% and 4.0% respectively.
An example of how we analyze potential investment ideas using a mix of qualitative and quantitative methods. In this case a look at the high-grade tax-exempt bond market and closed-end funds of tax-exempt debt.
Etude PwC 2013 sur les fusions-acquisitions dans le secteur des assurancesPwC France
http://pwc.to/16IfpG5
Ce nouveau rapport de PwC met en évidence la reprise des fusions-acquisitions dans le secteur de l’assurance, dont l’importance stratégique commence à augmenter à travers le monde.
- Merrill Lynch may have conflicts of interest due to business relationships with covered companies that could affect research report objectivity. Investors should consider this report as one factor among many.
- Independent, third-party research is available to Merrill Lynch customers in the US at no cost if such research exists for covered companies.
- The document provides analysis on risks to trust banks and asset managers from a potential US recession and equity market correction, but concludes both groups should continue outperforming the S&P 500 and credit-sensitive financials in the near-term. Selectivity is key among asset managers at this point.
Here is how I would arrange those in order of importance:
1. Income in Retirement
2. Long Term Care
3. Death Benefit
My reasoning is:
Income in retirement is most important as it allows you to financially support yourself once you stop working. Having a reliable source of income to cover living expenses should take priority.
Long term care is the next most important since the costs of care can be substantial if needed for an extended period of time. Having a way to pay for care, whether at home or in a facility, is very valuable.
A death benefit is least important on the list. While providing funds to loved ones after passing is good to have, it is not as
The document provides an analysis of Land Securities Group PLC, a UK property company. It includes the following key points:
- Land Securities is the largest property company in the UK by market capitalization and is a member of the FTSE 100.
- The analysis estimates the cost of equity for Land Securities to be 6.78% based on the company's beta of 0.9 calculated from its market model, a market risk premium of 5.2%, and a risk-free rate of 2.1%.
- Using the dividend valuation model with a dividend growth rate of 2.6% and the estimated cost of equity, the document values Land Securities' share price at £0.782, which
- The Alchemy Capital Management investment fund suffered losses in the fourth quarter of 2007 from hedge fund failures and the effects of the credit crunch. Approximately 40% of the fund's allocation was directly or indirectly linked to credit markets.
- Looking ahead, the fund has reduced its exposure to credit and illiquid securities to below 10% and increased diversification to more market neutral and arbitrage strategies. Volatility is expected to remain high given continued uncertainty in the markets.
- As of January 2008, the fund's strategy allocation was approximately 22.5% in long/short equity, 46% in market neutral, arbitrage and event driven strategies, and the remainder in multi-strategy, global macro, emerging markets and
The newsletter discusses quarterly investment performance and market outlooks across various asset classes. It provides commentary from investment managers on the performance of equities, fixed income, and specific funds. It also discusses using target date ETFs and the Lyrical U.S. Value Equity Fund as part of a blended bond strategy and highlights their differentiated investment approach.
The use of risk management products has grown tremendously in recent years and companies now employ large numbers of risk managers. A fundamental notion underlying these risk management practices is that cash flow and earnings volatility are harmful to shareholders—that is, these measures of volatility have a direct impact on the company’s stock price. If so, risk management tools that lower this volatility will benefit shareholders by raising the company’s stock price. In designing risk management programs, therefore, it is essential that managers have an understanding of the degree to which the market rewards the company’s stock price when cash flow and earnings volatility are lower. That is, CFOs need a market-
based measure of the benefits of reducing volatility through risk management practices.
In this paper, we provide evidence on whether companies with lower volatility are more highly valued than those with greater volatility. Our main findings are as follows:
Valuation multiple is substantially higher for companies with lower earnings per share (EPS) volatility. For example, a movement from the 75th percentile of EPS volatility to the 25th percentile increases the observed market-to-book (M-B) ratio from 1.15 to 1.32 (i.e., an increase of 15%).
Similarly, valuation multiple is significantly higher for companies with lower cash flow volatility. For example, a movement from the 75th percentile of cash flow volatility to the 25th percentile increases the observed market-to-book (M-B) ratio from 1.21 to 1.23.
Once we control for other determinants of the M-B ratio in a multivariate regression framework, we continue to find that cash flow volatility and earnings volatility have an economically meaningful impact on company value. All else equal, 10% reductions in EPS volatility and cash flow volatility are associated with increases in M-B ratios of 1.6% and 0.6%, respectively. Reductions in EPS volatility and cash flow volatility of 50% are associated with increases in M-B ratios of 11.2% and 4.0% respectively.
- Income trusts have become popular investments as they provide stable income in a low interest rate environment when stock and bond returns are uncertain.
- Income trusts work by pooling assets that generate cash flow, then distributing most cash flows to unitholders as dividends. This structure provides tax advantages over corporations.
- The document discusses the history and structure of income trusts, how they provide tax efficiency compared to corporations, and factors influencing their popularity as investments.
Compared to equities, bonds at first glance can appear like a throwback to your grandparent's days, but this month we take a look at how bonds may help mitigate risk, and the role they play in a well-diversified portfolio.
Indexed universal life (IUL) provides permanent life insurance protection with the potential for higher returns than traditional universal life due to its indexing of interest credits to external market indexes. IUL offers downside protection from market downturns while providing upside potential from market growth. Wealth Designs Advisors Group is available to consult on IUL case design and carrier selection to help clients meet their retirement, college funding, and other financial goals.
This report from S&P Capital IQ provides an overview and thematic outlook of the European insurance sector. The report is overweight on the sector, as rising interest rates and equity markets provide tailwinds. While accounting impacts of rising rates can cause short-term noise, higher investment returns will ultimately benefit life insurers. The report also notes regulatory uncertainties from Solvency II and the designation of some firms as globally systemic insurers.
Heinz Case Study: ESTIMATING THE COST OF CAPITAL IN UNCERTAIN TIMES sadia butt
H.J. Heinz faced difficulties in estimating its weighted average cost of capital (WACC) due to stock price fluctuations, low interest rates, and uncertainty about consumer risk appetite. This made it hard to accurately evaluate new projects. Specifically, Heinz's stock price fell from $47 to $34 in 2008 but returned to $47 by 2010. Additionally, interest rates remained low, and it was unclear how this affected consumer risk tolerance. As a result, the company struggled to settle on an appropriate WACC value.
Over nine weeks, the author invested $25,000 into stocks, ETFs, mutual funds, and bonds. The stocks, ETFs, and mutual funds portfolio increased 4.86% to $26,210.20, outperforming the S&P 500 which decreased 3%. However, the $24,633 invested into two bonds decreased 3.79% to $23,700, underperforming the Dow Jones Industrial Average which decreased 3.18%. Individual stock and bond performances are detailed in charts. The author analyzes each investment and correlates their performance to current economic events.
Institutional Allocation to Real Estate - An Evolving LandscapeSkyler MacGowan
This document discusses factors contributing to the increased institutional allocation to real estate investments since the 1980s. Decreased interest rates, demand for stable income assets, opportunities for higher returns through value-add and opportunistic investments, and structural changes improving real estate investment accessibility have all played roles. While allocation has increased across institutions, pension funds allocate the most at around 20% due to objectives prioritizing income. Most literature predicts continued increases in real estate portfolio weightings by institutions to 15-30% by 2030, though at a slower pace as interest rates rise.
While the Dow and other indices are frequently interpreted as indicators of broader stock market performance, the stocks composing these indices may not be representative of an investor’s total portfolio.
1) The editorial discusses recent economic developments and provides investment recommendations.
2) It notes that the US and Canadian economies are recovering slowly, Europe continues to struggle with debt problems, and China is slowing after years of tightening.
3) The editorial recommends a core portfolio of high-yielding stocks like REITs, utilities, telecoms and pipelines, along with growing companies in various sectors for higher risk.
Adding listed real estate to an unlisted portfolio what are the risk and ret...Consiliacapital
Adding listed real estate to an unlisted real estate portfolio can enhance returns while providing increased liquidity. Analyzing UK unlisted and global listed real estate fund data from 2003-2013, the study found:
1) Adding a 30% weighting to listed real estate would have increased absolute returns of the unlisted portfolio by 30% over 10 years and by 22% during a period of rising property values.
2) During the global financial crisis, including a 30% listed weighting led to only a marginal 2.2% decrease in returns, representing a small cost compared to the increased liquidity.
3) Breaking the period into different market conditions, the addition of listed real estate consistently enhanced returns except during
JPM Prime Brokerage Global Hedge Fund Trends November 2013Brian Shapiro
Hedge funds posted broad gains in October and year-to-date, led by equity long/short and event-driven strategies. Leverage declined slightly while short positions increased 2%. Most regions saw increased equity prices and tightening credit spreads. Earnings exceeded estimates but revenue growth was flat, raising uncertainty around sustained earnings growth. Global earnings forecasts continue to decline.
This document provides a fund summary and performance report for the KB Value Focus Korea Equity Fund as of April 30, 2019. It includes information on the fund's investment philosophy, portfolio statistics, top 10 holdings, sector allocation, performance charts and attribution analysis. The fund focuses on stock selection in the Korean market, emphasizing value stocks. For the month, it underperformed its benchmark index by 1.06% and the manager comments on market trends and individual stock contributors to performance.
The document is a 2012 health plans benchmarking report that provides data on key health plan design measures like out-of-pocket maximums, deductibles, copays, and coinsurance. It analyzes the data by region, industry, plan type, and employer size to help organizations compare their health plan offerings. The most common individual out-of-pocket maximum was $2,500-$3,499 and the most popular individual deductible range was $2,500 or more. Most emergency room copays were over $100 and coinsurance was most frequently 100%. Office visit copays clustered around $20-$34 and prescription drug deductibles were usually $0-$49 or $250 or more.
The document discusses how global insurers are rethinking their investment strategies in response to divergent monetary policies and quantitative easing programs. It finds that while insurers see positive short-term effects of QE on asset prices and growth, many are concerned about potential long-term imbalances and market distortions. Insurers are seeking to increase yield by taking on more risk, but are struggling due to low liquidity in fixed income markets and the lack of quality opportunities. They are holding high cash levels as they look for the right investments. Insurers are diversifying into alternative assets like real estate and private credit that generate income. Overall monetary policy uncertainty is a challenge as insurers balance short-term benefits of QE against
Reforming Dutch Pensions - New Capital Requirements for Existing Pension RightsAegon
The proposed changes to the Dutch pension regulation FTK1 would significantly increase capital requirements for pension funds. Key changes include higher stress tests for equity risk (especially listed and private equity) and new capital charges for actively managed equity portfolios. On average, required capital for pension funds would rise from 21.7% to 26.6% of liabilities under the new rules. This could impact underfunded pension funds and require long-term recovery plans to meet solvency standards. Pension funds may need to carefully optimize their investment and hedging strategies to efficiently use their available risk budgets under the stricter proposed regulations.
CFA Institute Research Challenge Sterling Financial Corporation (STSA) resear...RyanMHolcomb
Sterling Financial Corporation is a regional bank headquartered in Washington state that was heavily impacted by the financial crisis but has since recovered through recapitalization efforts. The report recommends holding Sterling stock with a price target of $19.46, a 5% increase, citing improving financial trends, a diversified loan portfolio, and growth strategies around loan originations and acquisitions. However, risks remain from economic uncertainty and interest rate pressures on margins.
This document discusses volatility and provides strategies for managing risk. It begins by stating that moderate volatility is healthy for financial markets as it separates strong from weak investments. The document then discusses three components needed for a well-functioning financial system: cognitive diversity among investors, full disclosure of information, and rewards/penalties for correct/incorrect views. It suggests investors should focus on owning businesses rather than reacting to market fluctuations, and construct diversified portfolios that are not overly correlated with any single index. Strategies discussed for managing risk include owning a variety of assets, investing globally for currency exposure benefits, and focusing on long-term goals rather than short-term volatility.
John Belushi was born in 1949 in Chicago, Illinois. He died of a drug overdose in 1982 at the age of 33 at the Chateau Marmont hotel in Hollywood, California. The document provides biographical details about Belushi's life and career, including attending college in Illinois in 1968, joining the improv group The Second City in 1971, and appearing on Saturday Night Live. Photos and videos from his career are displayed on his fakebook profile.
In this 40-minute presentation, I review a handful of hiking destinations in the NY metro area. In addition to covering trails, camp sites and history, I also share information on how to access each area, with an emphasis on mass transit. This presentation makes use of maps, directional aids and images.
The document discusses the significance of brand ambassadors through a story told by a business owner to a journalist. Initially, the owner's ordinary brand ambassador failed to effectively promote his shampoo brand, causing business losses. On the secretary's advice, the owner then hired a scientist to be the brand ambassador, as the scientist could credibly discuss the product's benefits. This strategic change was successful, helping raise the brand from a lower to higher level. The owner stresses the importance of choosing a suitable brand ambassador to increase sales.
JMango360: Van web naar app (MARCOM14)
JMango360 is een krachtige doe-het-zelf app bouwer voor het MKB. Het is verrassend eenvoudig om zelf een zeer hoogwaardige mobiele applicatie te maken waar jij als ondernemer trots op kunt zijn. Een app bouwen is nog nooit zo makkelijk en financieel aantrekkelijk geweest. In drie stappen bouw je snel en zonder enige programmeer kennis - je eigen mobiele app met een uniek uiterlijk, passend bij jouw bedrijf.
De m-commerce module is volledig geintegreerd met Magento. Hierdoor kan elke Magento webshop eigenaar zijn of haar webshop koppelen met de mobiele applicatie.
Sinds 2008 bouwt JMango mobiele applicaties voor diverse bedrijven, van start-ups tot grote ondernemingen. Onze visie is om alle bedrijven van groot tot klein het mobiele kanaal optimaal te laten inzetten, om klanten te werven, te informeren en als verkoop kanaal. Om mobiele apps voor iedereen bereikbaar te maken, hebben we JMango360 ontwikkeld.
Advanced Markets Insight: Common Life Insurance MistakesM Financial Group
Life insurance can be used to accomplish many important planning objectives. However, if improperly managed, policy proceeds may be inadvertently subject to estate, gift, or income tax. An understanding of life insurance products and tax laws, as well as planning mistakes to avoid, will help to maximize the value of the life insurance asset.
- Income trusts have become popular investments as they provide stable income in a low interest rate environment when stock and bond returns are uncertain.
- Income trusts work by pooling assets that generate cash flow, then distributing most cash flows to unitholders as dividends. This structure provides tax advantages over corporations.
- The document discusses the history and structure of income trusts, how they provide tax efficiency compared to corporations, and factors influencing their popularity as investments.
Compared to equities, bonds at first glance can appear like a throwback to your grandparent's days, but this month we take a look at how bonds may help mitigate risk, and the role they play in a well-diversified portfolio.
Indexed universal life (IUL) provides permanent life insurance protection with the potential for higher returns than traditional universal life due to its indexing of interest credits to external market indexes. IUL offers downside protection from market downturns while providing upside potential from market growth. Wealth Designs Advisors Group is available to consult on IUL case design and carrier selection to help clients meet their retirement, college funding, and other financial goals.
This report from S&P Capital IQ provides an overview and thematic outlook of the European insurance sector. The report is overweight on the sector, as rising interest rates and equity markets provide tailwinds. While accounting impacts of rising rates can cause short-term noise, higher investment returns will ultimately benefit life insurers. The report also notes regulatory uncertainties from Solvency II and the designation of some firms as globally systemic insurers.
Heinz Case Study: ESTIMATING THE COST OF CAPITAL IN UNCERTAIN TIMES sadia butt
H.J. Heinz faced difficulties in estimating its weighted average cost of capital (WACC) due to stock price fluctuations, low interest rates, and uncertainty about consumer risk appetite. This made it hard to accurately evaluate new projects. Specifically, Heinz's stock price fell from $47 to $34 in 2008 but returned to $47 by 2010. Additionally, interest rates remained low, and it was unclear how this affected consumer risk tolerance. As a result, the company struggled to settle on an appropriate WACC value.
Over nine weeks, the author invested $25,000 into stocks, ETFs, mutual funds, and bonds. The stocks, ETFs, and mutual funds portfolio increased 4.86% to $26,210.20, outperforming the S&P 500 which decreased 3%. However, the $24,633 invested into two bonds decreased 3.79% to $23,700, underperforming the Dow Jones Industrial Average which decreased 3.18%. Individual stock and bond performances are detailed in charts. The author analyzes each investment and correlates their performance to current economic events.
Institutional Allocation to Real Estate - An Evolving LandscapeSkyler MacGowan
This document discusses factors contributing to the increased institutional allocation to real estate investments since the 1980s. Decreased interest rates, demand for stable income assets, opportunities for higher returns through value-add and opportunistic investments, and structural changes improving real estate investment accessibility have all played roles. While allocation has increased across institutions, pension funds allocate the most at around 20% due to objectives prioritizing income. Most literature predicts continued increases in real estate portfolio weightings by institutions to 15-30% by 2030, though at a slower pace as interest rates rise.
While the Dow and other indices are frequently interpreted as indicators of broader stock market performance, the stocks composing these indices may not be representative of an investor’s total portfolio.
1) The editorial discusses recent economic developments and provides investment recommendations.
2) It notes that the US and Canadian economies are recovering slowly, Europe continues to struggle with debt problems, and China is slowing after years of tightening.
3) The editorial recommends a core portfolio of high-yielding stocks like REITs, utilities, telecoms and pipelines, along with growing companies in various sectors for higher risk.
Adding listed real estate to an unlisted portfolio what are the risk and ret...Consiliacapital
Adding listed real estate to an unlisted real estate portfolio can enhance returns while providing increased liquidity. Analyzing UK unlisted and global listed real estate fund data from 2003-2013, the study found:
1) Adding a 30% weighting to listed real estate would have increased absolute returns of the unlisted portfolio by 30% over 10 years and by 22% during a period of rising property values.
2) During the global financial crisis, including a 30% listed weighting led to only a marginal 2.2% decrease in returns, representing a small cost compared to the increased liquidity.
3) Breaking the period into different market conditions, the addition of listed real estate consistently enhanced returns except during
JPM Prime Brokerage Global Hedge Fund Trends November 2013Brian Shapiro
Hedge funds posted broad gains in October and year-to-date, led by equity long/short and event-driven strategies. Leverage declined slightly while short positions increased 2%. Most regions saw increased equity prices and tightening credit spreads. Earnings exceeded estimates but revenue growth was flat, raising uncertainty around sustained earnings growth. Global earnings forecasts continue to decline.
This document provides a fund summary and performance report for the KB Value Focus Korea Equity Fund as of April 30, 2019. It includes information on the fund's investment philosophy, portfolio statistics, top 10 holdings, sector allocation, performance charts and attribution analysis. The fund focuses on stock selection in the Korean market, emphasizing value stocks. For the month, it underperformed its benchmark index by 1.06% and the manager comments on market trends and individual stock contributors to performance.
The document is a 2012 health plans benchmarking report that provides data on key health plan design measures like out-of-pocket maximums, deductibles, copays, and coinsurance. It analyzes the data by region, industry, plan type, and employer size to help organizations compare their health plan offerings. The most common individual out-of-pocket maximum was $2,500-$3,499 and the most popular individual deductible range was $2,500 or more. Most emergency room copays were over $100 and coinsurance was most frequently 100%. Office visit copays clustered around $20-$34 and prescription drug deductibles were usually $0-$49 or $250 or more.
The document discusses how global insurers are rethinking their investment strategies in response to divergent monetary policies and quantitative easing programs. It finds that while insurers see positive short-term effects of QE on asset prices and growth, many are concerned about potential long-term imbalances and market distortions. Insurers are seeking to increase yield by taking on more risk, but are struggling due to low liquidity in fixed income markets and the lack of quality opportunities. They are holding high cash levels as they look for the right investments. Insurers are diversifying into alternative assets like real estate and private credit that generate income. Overall monetary policy uncertainty is a challenge as insurers balance short-term benefits of QE against
Reforming Dutch Pensions - New Capital Requirements for Existing Pension RightsAegon
The proposed changes to the Dutch pension regulation FTK1 would significantly increase capital requirements for pension funds. Key changes include higher stress tests for equity risk (especially listed and private equity) and new capital charges for actively managed equity portfolios. On average, required capital for pension funds would rise from 21.7% to 26.6% of liabilities under the new rules. This could impact underfunded pension funds and require long-term recovery plans to meet solvency standards. Pension funds may need to carefully optimize their investment and hedging strategies to efficiently use their available risk budgets under the stricter proposed regulations.
CFA Institute Research Challenge Sterling Financial Corporation (STSA) resear...RyanMHolcomb
Sterling Financial Corporation is a regional bank headquartered in Washington state that was heavily impacted by the financial crisis but has since recovered through recapitalization efforts. The report recommends holding Sterling stock with a price target of $19.46, a 5% increase, citing improving financial trends, a diversified loan portfolio, and growth strategies around loan originations and acquisitions. However, risks remain from economic uncertainty and interest rate pressures on margins.
This document discusses volatility and provides strategies for managing risk. It begins by stating that moderate volatility is healthy for financial markets as it separates strong from weak investments. The document then discusses three components needed for a well-functioning financial system: cognitive diversity among investors, full disclosure of information, and rewards/penalties for correct/incorrect views. It suggests investors should focus on owning businesses rather than reacting to market fluctuations, and construct diversified portfolios that are not overly correlated with any single index. Strategies discussed for managing risk include owning a variety of assets, investing globally for currency exposure benefits, and focusing on long-term goals rather than short-term volatility.
John Belushi was born in 1949 in Chicago, Illinois. He died of a drug overdose in 1982 at the age of 33 at the Chateau Marmont hotel in Hollywood, California. The document provides biographical details about Belushi's life and career, including attending college in Illinois in 1968, joining the improv group The Second City in 1971, and appearing on Saturday Night Live. Photos and videos from his career are displayed on his fakebook profile.
In this 40-minute presentation, I review a handful of hiking destinations in the NY metro area. In addition to covering trails, camp sites and history, I also share information on how to access each area, with an emphasis on mass transit. This presentation makes use of maps, directional aids and images.
The document discusses the significance of brand ambassadors through a story told by a business owner to a journalist. Initially, the owner's ordinary brand ambassador failed to effectively promote his shampoo brand, causing business losses. On the secretary's advice, the owner then hired a scientist to be the brand ambassador, as the scientist could credibly discuss the product's benefits. This strategic change was successful, helping raise the brand from a lower to higher level. The owner stresses the importance of choosing a suitable brand ambassador to increase sales.
JMango360: Van web naar app (MARCOM14)
JMango360 is een krachtige doe-het-zelf app bouwer voor het MKB. Het is verrassend eenvoudig om zelf een zeer hoogwaardige mobiele applicatie te maken waar jij als ondernemer trots op kunt zijn. Een app bouwen is nog nooit zo makkelijk en financieel aantrekkelijk geweest. In drie stappen bouw je snel en zonder enige programmeer kennis - je eigen mobiele app met een uniek uiterlijk, passend bij jouw bedrijf.
De m-commerce module is volledig geintegreerd met Magento. Hierdoor kan elke Magento webshop eigenaar zijn of haar webshop koppelen met de mobiele applicatie.
Sinds 2008 bouwt JMango mobiele applicaties voor diverse bedrijven, van start-ups tot grote ondernemingen. Onze visie is om alle bedrijven van groot tot klein het mobiele kanaal optimaal te laten inzetten, om klanten te werven, te informeren en als verkoop kanaal. Om mobiele apps voor iedereen bereikbaar te maken, hebben we JMango360 ontwikkeld.
Advanced Markets Insight: Common Life Insurance MistakesM Financial Group
Life insurance can be used to accomplish many important planning objectives. However, if improperly managed, policy proceeds may be inadvertently subject to estate, gift, or income tax. An understanding of life insurance products and tax laws, as well as planning mistakes to avoid, will help to maximize the value of the life insurance asset.
This workshop series is designed for K-5 educators and administrators to address the need for ongoing professional development around issues of race, culture, and diversity. The workshops will help build understanding and acceptance among students from different backgrounds. The school serves a diverse population of students from various racial, ethnic, economic, linguistic, and ability backgrounds. The workshops aim to help create a safe, welcoming environment where diversity is accepted and all students are encouraged regardless of their differences.
Advanced Markets Insight: Life Insurance Basics—Life Insurance Pricing and Po...M Financial Group
The pricing of life insurance policies is complex and dynamic. There are four factors that primarily drive pricing and policy performance: mortality, investment earnings, expenses and taxes, and persistency. The impact of the varying pricing factors on policy performance will vary in importance depending on the type of policy design. Each pricing factor is based on current experience, usually from the insurer itself but sometimes complemented by data from actuarial consulting firms, public sources, or reinsurers.
M White Paper: NACI IUL Illustration Guideline DebateM Financial Group
This M White Paper is designed to provide details on the IUL illustration debate, articulate the position shared by a majority of the industry, and provide our Member Firms support in the event a client or advisor has questions in light of recent publicity.
Advanced Markets Insight: Nonqualified Deferred Compensation—Demystifying the...M Financial Group
A nonqualified plan can help an employer accomplish its objective of recruiting, retaining, and rewarding key employees through income tax-deferred compensation. A phantom stock plan is a popular and effective nonqualified deferred compensation plan used by employers to share value with selected key employees without relinquishing business control and decision-making powers. As a result, the employee has the ability to share in the success of the company without capital investment or shareholder liability.
Dane Consigny wrote about wanting to be Superman if he were a superhero. The document provides facts about Superman, including that his real name is Kal-El, he was born on the planet Krypton before it exploded, and he has superpowers like flying, super strength, laser vision, and invulnerability due to absorbing solar energy. Dane's favorite Superman superpower is his eidetic memory, which allows him to remember anything he has seen, heard, or read with perfect clarity.
Ruth Silveira - 2 e 3 quartos próximo ao Minas Shopping, Hotel Ouro Minas, Mi...Ana Estevan
As vendas estão indo bem e há mais informações e oportunidades de vendas disponíveis. O documento discute o desempenho de vendas e oferece mais detalhes e possibilidades para aumentar as vendas.
This document provides information about the National Bank of Pakistan (NBP) and Habib Bank Limited (HBL), including their histories and the services they offer. It outlines that NBP was established in 1949 as a government-owned bank, while HBL was established in 1941 and was Pakistan's first commercial bank. It compares their card services, noting that HBL offers credit cards accepted at over 29 million merchants worldwide, debit cards, ATM cards for bill payments and funds transfers, while NBP primarily offers debit and ATM services accepted nationwide. The conclusion is that HBL provides more extensive and globally accessible card services compared to NBP.
Investing in a Rising Rate Environment - Dec. 2011RobertWBaird
- Rising interest rates can negatively impact bond prices in the short-term but a focus on total return, which includes interest income, provides a more accurate picture of bond performance over time.
- An analysis of periods from 1994-2006 when the Federal Reserve raised rates found that while bond prices fell in the majority of months, interest income was positive every month and total returns were positive in 64% of months.
- Diversifying across different types of bonds can help mitigate the effects of rising rates as different bond segments perform variably depending on economic conditions. Professional bond managers employ strategies to offset negative impacts and maximize total returns.
[LATAM EN] Convertible bonds offer investors equity-like returns with a risk ...NN Investment Partners
Convertible bonds offer investors potential equity-like returns with lower risk than equities. Convertible bonds have historically outperformed other asset classes over the past 40 years and have lower volatility than equities. NN Investment Partners' convertible bond strategy seeks to capture upside potential from rising equity markets while limiting downside risk through in-depth credit analysis and theme-based equity selection. The strategy focuses on balanced convertibles from a select number of companies that combine solid fundamentals and equity upside potential.
[EN] Convertible bonds offer investors equity-like returns with a risk profil...NN Investment Partners
NN Investment Partners explains how convertible bonds offer investors equity-like returns with a risk profile comparable to that of bonds, from November 2015.
[CH] Convertible bonds offer investors equity-like returns with a risk profil...NN Investment Partners
NN Investment Partners explains how convertible bonds offer investors equity-like returns with a risk profile comparable to that of bonds, from November 2015.
NN Investment Partners explains how convertible bonds offer investors equity-like returns with a risk profile comparable to that of bonds, from November 2015.
[UK] Convertible bonds offer investors equity-like returns with a risk profil...NN Investment Partners
NN Investment Partners explains how convertible bonds offer investors equity-like returns with a risk profile comparable to that of bonds, from November 2015.
[JP] Convertible bonds offer investors equity-like returns with a risk profil...NN Investment Partners
NN Investment Partners explains how convertible bonds offer investors equity-like returns with a risk profile comparable to that of bonds, from November 2015.
Sheet1YearTypeYieldYieldDec-12Floating Note2.50002.50%Dec-13Floating Note3.00003.00%Dec-14Floating Note3.10003.10%Dec-15Floating Note3.45003.45%Dec-1220 Year US Bond3.25003.25%Dec-1320 Year US Bond-13.9100-13.91%Dec-1420 Year US Bond27.350027.35%Dec-1520 Year US Bond-1.6500-1.65%Dec-12Municipal1.80001.80%Dec-13Municipal1.82001.82%Dec-14Municipal1.68001.68%Dec-15Municipal1.69001.69%Dec-12Fannie Mae2.82602.83%Dec-13Fannie Mae4.02354.02%Dec-14Fannie Mae3.45003.45%Dec-15Fannie Mae3.54303.54%Dec-12TIPS-1.0760-1.08%Dec-13TIPS2.60602.61%Dec-14TIPS4.74204.74%Dec-15TIPS-0.6070-0.61%
Sheet2
Sheet3
26 week bond
Yield Graph
Price Graph
Description
52 week bond
Yield Graph
Price Graph
Description
B. Floating rate note
20 year US Bond
Municipal Bond
Fannie Mae
Yield Curve
G. Multinational Corporation
?
TIPS
4/17/2016
FINC736-MO1: Team Project A1
Team Project using Bloomberg Terminal
Teams are required to familiarize themselves with extracting data from the Bloomberg terminal(s). These terminals are available both at the Manhattan Trading Room (5thFloor, at 26 West, 61st Street) and at the Old Westbury Library. Please contact the Graduate Assistant Xunpo Wang who is stationed at 26 West 61st Street, in Room 503, to help you with signing on to Bloomberg and doing Bloomberg basic data extraction. There are also student-friendly user manuals available at each terminal in both locations.
(1) Select and collect the following Bloomberg screens:
a. One 26 week Treasury Bill and one 52 week Treasury Bill
b. One Floating Rate Note or Bond (floater)
c. One USA Government Bond with remaining time to maturity of 12 years
d. One Municipal Bond
e. One FANNIE MAE Bond
f. USA Government Yield Curve and Spot Rates
g. One Corporate Bond out of the list of customized Multinational Companies [see item (5) below].
(2) Next, collect Four data points of each of the above security’s end-of-year security prices at the closing dates of December 31st, 2012, 2013, 2014 and 2015.
(3) Calculate the Expected and the Actual Capital Gains Yield (CGY), the Current (Coupon) Yield (CY), and the Total Yield (TY) for each security during 2013 and 2014. Also find the present Yield-to-Maturity for each security.
(4) Examine and print the screens of the above chosen securities and collect all of the data that you need to use for your project including measures of Risk, Duration, Convexity and Yield Spreads.
(5) Use the Bloomberg Terminal to select your Corporate Bond out of the list of customized Multinational Companies as Follows:
a. Select one Corporate Bond (remaining m.
EBook A Guide to Fixed Index Annuities_2.pdfAl Bruce
This document provides a summary and comparison of fixed index annuities versus popular alternatives like bank CDs and direct stock market investments. It contains three exhibits that hypothetically demonstrate how fixed index annuities can provide higher growth potential than CDs while also protecting against losses during market downturns. The summary explains that fixed index annuities offer upside potential linked to market indexes while providing downside protections and avoiding risk of losing premiums due to market fluctuations.
ADV3840 Pathsetter Diversification Brochure.pdfAl Bruce
Diversifying premium allocations across multiple indexed interest crediting options in a fixed indexed universal life (FIUL) policy can help reduce risks. Using a single crediting option carries the risk that it may credit the minimum interest rate for as often as one-third of crediting periods. However, diversifying across options with varying performance in different market conditions can potentially smooth growth over time by reducing chances of minimum interest. While no option will always perform best, diversifying may help policyholders avoid missing out on potential interest from strongly performing options in any given year.
- The Canadian life insurance industry is facing significant challenges due to prolonged low interest rates, changes to accounting standards, and proposed changes to regulations governing life insurance policies.
- Insurers are finding it difficult to generate sufficient returns to cover long-term liabilities in the current interest rate environment. They have increased prices and discontinued some permanent life insurance products.
- Proposed changes to rules around the "exempt test" that governs tax treatment of life insurance policies could reduce the amount clients can accumulate in universal and whole life policies. Insurers and advisors face challenges adapting to these changes.
This document describes the DSP BlackRock Bond Fund, an open-ended medium term debt scheme. It aims to generate stable returns for conservative investors seeking income through investments in AA rated and above corporate bonds with moderate duration of 2.5-3.5 years. The portfolio seeks to minimize both market and credit risk through investments in short tenure high quality corporate bonds rated AAA to AA with low duration and no investments below AA rating.
Convertible bonds can provide diversification benefits and higher risk-adjusted returns than equities or bonds in a low-yield environment. NN Investment Partners examines the historical performance of convertible bonds globally and in Japan, where convertibles outperformed stocks and bonds for the past decade. The document describes a predictive model for convertible bond returns based on stochastic diffusion of key market factors. The model aims to assess how convertibles may contribute positively to asset allocation going forward in the current low-yield environment.
[LATAM EN] The use of convertible bonds in the asset allocation processNN Investment Partners
Convertible bonds can provide diversification benefits and higher risk-adjusted returns than other asset classes in a low-yield environment. The document examines historical performance of convertible bonds globally and in Japan, which experienced low yields for over a decade. A simulation model is described that predicts future convertible bond returns based on stochastic diffusion of key market factors. The document concludes convertible bonds deserve consideration for asset allocation given their ability to participate in equity upside while providing downside protection from bond floors.
Mercer Capital's Value Focus: Insurance Industry | Q4 2014 | Special Suppleme...Mercer Capital
Mercer Capital’s Insurance Industry newsletter is a quarterly publication providing perspective on valuation issues pertinent to insurance brokers, underwriters, and other industry professionals. Each issue includes a segment focus, market overview, mergers and acquisitions review, and more.
- The document provides an economic outlook and recommendations for a moderately conservative investment portfolio for client Jordan Belfort.
- It analyzes factors like GDP growth, unemployment, consumer confidence, housing, and jobless claims to predict continued slow economic recovery in the US and globally over the next few years.
- Based on this outlook, it recommends a portfolio allocation of 20% equities, 35% bonds, 40% mutual funds and ETFs, and 5% cash, with overweight positions in dividend-paying equities and investment-grade corporate debt.
Similar to M Intelligence: Update on Dividend Interest Rates (20)
Independent Study - College of Wooster Research (2023-2024) FDI, Culture, Glo...AntoniaOwensDetwiler
"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
How Does CRISIL Evaluate Lenders in India for Credit RatingsShaheen Kumar
CRISIL evaluates lenders in India by analyzing financial performance, loan portfolio quality, risk management practices, capital adequacy, market position, and adherence to regulatory requirements. This comprehensive assessment ensures a thorough evaluation of creditworthiness and financial strength. Each criterion is meticulously examined to provide credible and reliable ratings.
Solution Manual For Financial Accounting, 8th Canadian Edition 2024, by Libby...Donc Test
Solution Manual For Financial Accounting, 8th Canadian Edition 2024, by Libby, Hodge, Verified Chapters 1 - 13, Complete Newest Version Solution Manual For Financial Accounting, 8th Canadian Edition by Libby, Hodge, Verified Chapters 1 - 13, Complete Newest Version Solution Manual For Financial Accounting 8th Canadian Edition Pdf Chapters Download Stuvia Solution Manual For Financial Accounting 8th Canadian Edition Ebook Download Stuvia Solution Manual For Financial Accounting 8th Canadian Edition Pdf Solution Manual For Financial Accounting 8th Canadian Edition Pdf Download Stuvia Financial Accounting 8th Canadian Edition Pdf Chapters Download Stuvia Financial Accounting 8th Canadian Edition Ebook Download Stuvia Financial Accounting 8th Canadian Edition Pdf Financial Accounting 8th Canadian Edition Pdf Download Stuvia
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The Universal Account Number (UAN) by EPFO centralizes multiple PF accounts, simplifying management for Indian employees. It streamlines PF transfers, withdrawals, and KYC updates, providing transparency and reducing employer dependency. Despite challenges like digital literacy and internet access, UAN is vital for financial empowerment and efficient provident fund management in today's digital age.
Optimizing Net Interest Margin (NIM) in the Financial Sector (With Examples).pdfshruti1menon2
NIM is calculated as the difference between interest income earned and interest expenses paid, divided by interest-earning assets.
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Understanding how timely GST payments influence a lender's decision to approve loans, this topic explores the correlation between GST compliance and creditworthiness. It highlights how consistent GST payments can enhance a business's financial credibility, potentially leading to higher chances of loan approval.
A toxic combination of 15 years of low growth, and four decades of high inequality, has left Britain poorer and falling behind its peers. Productivity growth is weak and public investment is low, while wages today are no higher than they were before the financial crisis. Britain needs a new economic strategy to lift itself out of stagnation.
Scotland is in many ways a microcosm of this challenge. It has become a hub for creative industries, is home to several world-class universities and a thriving community of businesses – strengths that need to be harness and leveraged. But it also has high levels of deprivation, with homelessness reaching a record high and nearly half a million people living in very deep poverty last year. Scotland won’t be truly thriving unless it finds ways to ensure that all its inhabitants benefit from growth and investment. This is the central challenge facing policy makers both in Holyrood and Westminster.
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M Intelligence: Update on Dividend Interest Rates
1. Dividend Interest Rates for 2015
Near the end of each calendar year, mutual insurance companies declare their
dividend interest rates on participating whole life (WL) insurance policies for the
following year. Below are the 2015 declared dividend interest rates (DIR) of the four
largest issuers of participating WL policies, as taken from the carriers’ own publicized
dividend announcements:
• Guardian Life Insurance Co. of America 6.05% (down from 6.25% in 2014)
• Massachusetts Mutual Life Insurance Co. 7.10%
• New York Life Insurance Co. 6.20% (up from 6.00% in 2014)1
• Northwestern Mutual Life Insurance Co. 5.60%
This M Intelligence piece provides information on the elements that drive changes in
DIRs—as supported by historical DIR results, insurance company asset allocations,
and investment returns—for the four major mutual life insurance companies.
Dividend Interest Rate
The declared dividend interest rate in a participating WL policy has a very different
application than a UL crediting rate; therefore dividend interest rates are not
comparable on an absolute basis. To illustrate this point, in most participating WL
policies one part of the dividend is based on a formula using the declared dividend
interest rate. The formula can be generically described as taking the excess of the
declared dividend interest rate over the policy guaranteed rate multiplied by the
“policy value.”
While this formula is straightforward, its application varies widely by insurer and
policy. By example, some insurers may make additional deductions from the declared
DIR to cover expenses or mortality, some policies will have multiple guaranteed
interest rates to choose from (e.g., one for policy cash surrender value and one for
policy reserves), and there is wide variation in what is used in “policy value” may be a
reserve, a cash surrender value, the greater of the two, a year-end value or a mid-year
value, etc.
For these reasons, limited reliable conclusions can be drawn from comparing the
absolute DIRs of various policies. In fact, many insurers who issue participating WL
policies have stopped publishing a DIR because the rate can mean different things to
different people, and reliance upon the absolute rate can be misleading.
1 New York Life changed the methodology it uses to calculate the dividend interest rate (DIR) in 2010 to more closely
align with the DIR methodology used by other carriers.This change had the effect of raising the DIR by 32 basis points from
the previous method. For purposes of this study, the DIR in years prior to 2010 have been adjusted to reflect this change in
methodology.
Life insurance due
care requires an
understanding of the
factors that impact
policy performance
and drive product
selection.
M Financial Group
continues to lead the
industry in life
insurance due care
and client advocacy,
providing valuable
insight and analysis
that delivers
significant value
to clients.
July 2015
M INTELLIGENCE
2. 2
Dividend Interest Rates for 2015 (continued)
However, because changes in DIRs over time have tended to align with new money interest rate movements, the
following analysis does provide helpful insight for policyholders.
Fixed Income Asset Classes Lead Insurance Company Portfolios
Insurance companies invest assets primarily in investment grade bonds and mortgages. These fixed income asset
classes are a strong match in supporting insurance liabilities. As seen in Table 1, nearly 85% of insurance industry
invested assets were in bonds and mortgages at year-end 2014. Table 2 shows that 94% of industry bond holdings
were class 1 and 2 (i.e., investment grade); 63% were class 1.
Table 1. Asset Allocation of U.S. Life/Health Industry Invested Assets, 2014
Bonds 74.1%
Mortgages 10.2%
Other 4.4%
Contract Loans 3.6%
Cash & ST 2.7%
Common Stocks 2.1%
Real Estate 0.6%
Preferred Stocks 0.3%
Table 2. NAIC Classification of U.S. Life/Health Industry Bond Assets, 2014 (with Moody’s and S&P equiva-
lent ratings)
Class 1 (Moody's 'A3' or better; S&P 'A-' or better) 63.4%
Class 2 (Moody's 'Baa'; S&P 'BBB') 30.8%
Class 3 (Moody's 'Ba'; S&P 'BB') 3.8%
Class 4 (Moody's 'B'; S&P 'B') 1.6%
Class 5 (Moody's 'Caa'; S&P 'CCC') 0.4%
Class 6 (Moody's below 'Caa'; S&P below 'CCC') 0.1%
The Correlation between Dividend Interest Rates and Fixed Income Benchmark
Due to insurance company invested asset concentration in bonds and mortgages, changes in DIRs generally correlate
to long-term interest rate changes, especially benchmarks reflecting a seasoned portfolio of long-term interest rates.
The Moody’s ‘Aaa’ Long-Term Corporate Bond Yield Average, which provides the new money rate for an investment
grade fixed income instrument, serves as an effective proxy for a typical insurance company asset. The seven-year
rolling average of Moody’s ‘Aaa’ can provide an example of an insurance company portfolio yield as the rolling average
contains both older and newer investments, simulating the older assets that mature and roll off the books and the
purchase of new assets over time. When referring to Figure 1, which shows historical interest rates, demonstrates
that new money interest rates have been declining; the seven-year rolling average (proxy for portfolio yield) has also
been declining but lags new money rates. For example, if new money rates are below the portfolio yield and were
to remain level, the portfolio yield would steadily decrease over time and would equal the new money rate in seven
years (the lag factor).
3. 3
Dividend Interest Rates for 2015 (continued)
Figure 1. Monthly and 7-Year Rolling Average of Moody’s ‘Aaa’ Long-Term Corporate Bond Yield Average
In Figure 1, the new money rate as of January 1, 2015 was approximately 85 basis points (bps) below the seven-year
rolling average. Therefore, if new money rates remain at this level we should anticipate that DIRs will be at risk of
an 85 bps drop over the next seven years due to the correlation between DIRs and the Moody’s seven-year rolling
average, as shown on the following page.
3
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2008
2009
2010
2011
2012
2013
2014
%
Moody's Aaa Corp Bond Yield (monthly) WL Benchmark (Moody's 7-yr Rolling Average)
4. 4
Dividend Interest Rates for 2015 (continued)
Figure 2. Moody’s Benchmark & Insurance Company Annual Dividend Interest Rates (1986–2015)
Historically, the annual change in the seven-year rolling average of the Moody’s ‘Aaa’ Long-Term Corporate Bond
Yield Average, referred to in this analysis as the Moody’s Benchmark (Figure 2), correlates well with the annual change
in DIRs. Since insurance companies declare their annual dividend rates near the end of the previous calendar year, the
Moody’s benchmark is as of the end of the previous year. For example, the value of the Benchmark shown for 2015 is
as of December 31, 2014.
4
5
6
7
8
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14
1986
1987
1988
1989
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2005
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2007
2008
2009
2010
2011
2012
2013
2014
2015
%
Moody's Benchmark Guardian MassMutual
New York Life Northwestern Mutual
5. 5
Figure 3. Highest and Lowest Insurance Company Annual DIRs Compared to Moody’s Benchmark (1986–2015)
Highlighting the highest and lowest DIRs each year illustrates the movement correlation between DIRs and the
Moody’s Benchmark. Figure 3 charts the highest and lowest DIRs each year with the color of the line changing to
reflect the respective insurer to which the rate applied. (The color black signifies that multiple insurers shared the
same highest or lowest rate.) Each of the four insurance companies had both the highest and the lowest DIR during
at least one year between 1986 and 2015.
It is important to note that the correlation between DIRs and the Moody’s Benchmark involves changes in those rates
over time, not the rate itself. For example, the Moody’s Benchmark rate as of December 31, 2014 was approximately
4.7%; however, the portfolio yields of the insurance companies are currently in the range of 4.7% to 5.5%. The
difference can be atributed to insurance companies capturing yield from other alternative investment classes, such
as equities, and potentially from taking some additional credit risk (i.e., lower rated bonds). As detailed later in this
M Intelligence piece, these alternative asset classes may be driving the divergence between DIRs and the Moody’s
Benchmark.
4
5
6
7
8
9
10
11
12
13
14
1986
1987
1988
1989
1990
1991
1992
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1995
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1997
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2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
%
Moody's Benchmark
Dividend Interest Rates for 2015 (continued)
6. 6
Figure 4. Moody’s Benchmark & Insurance Company Annual Dividend Interest Rates (2003–2015)
Figure 4 shows that DIRs have become more divergent from the Moody’s Benchmark in recent years (2003 - 2015).
Also of note is that Northwestern Mutual’s DIR has the largest drop (highest DIR in 2003 and lowest DIR in 2015)
and Mass Mutual’s DIR has grown to be the outlier in 2015.
To gain some perspective on today’s DIRs we can look at historical average differences between various carrier DIRs
and the Moody’s Benchmark. Table 3 shows carrier DIRs and the average differences from the Moody’s Benchmark
over both 10-year (2005–2014) and 20-year (1995–2014) periods.
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
%
Moody's Benchmark Guardian MassMutual
New York Life Northwestern Mutual
Dividend Interest Rates for 2015 (continued)
7. 7
Table 3. Current Insurance Company DIRs and Average Differences from Moody’s Benchmark
Rate Difference from Benchmark
2014 2015 2014 2015
10-year
average
20-year
average
Moody's Benchmark 4.86 4.66
Guardian 6.25 6.05 1.39 1.39 1.26 0.91
Mass Mutual 7.10 7.10 2.24 2.44 1.75 1.21
New York Life 6.00 6.20 1.14 1.54 0.90 0.68
Northwestern Mutual 5.60 5.60 0.74 0.94 0.89 0.96
The Moody’s Benchmark dropped 20 bps from 2014 to 2015, reflecting lower new money interest rates. The DIR
drop for Guardian matched the reduction in the Moody’s benchmark but Mass Mutual and Northwestern Mutual
maintained their DIRs and New York Life actually increased its DIR by 20 bps.
Table 3 is useful to compare current DIRs relative to the Moody’s Benchmark (i.e. the spread) and how those 2015
spreads compare to historical averages for each carrier. The spread for Mass Mutual is over 120 bps higher than the
20-year average spread and New York Life’s spread is 86 bps higher than the historical average. This would suggest
that both companies DIRs may be more vulnerable to reductions if interest rates remain low. On the other hand,
Northwestern Mutual’s spread is on par with the average over the past 20 years. Guardian’s spread is 48 bps above the
20-year average, which is not as high as Mass Mutual and New York Life.
When spreads increase, or DIRs are maintained/increased in a decreasing interest rate environment, it begs the
question of what is driving the spread and the future sustainability of that spread/DIR. For DIRs that reflect both
mortality and portfolio yield experience, it could be better mortality experience offsetting lower portfolio yield
experience. Some mutual companies invest surplus in alternative investments, like subsidiaries or private equity,
which have performed well recently, and are able to pass back that better investment experience through the
participating DIR. However, alternative investments tend to be less liquid and generate more volatile returns, which
may result in more risk to the dividend scale (DIR).
Dividend Interest Rates for 2015 (continued)
8. 8
Increased Allocation to Slightly Lower Rated Bonds
One possible reason for the divergence from the Moody’s ‘Aaa’ Benchmark is a shift in the asset allocation. While
the bond allocation of the four mutual life insurance companies has been relatively stable (between 57% and 64%
on average from 1995 to 2014) there has been a shift in the relative credit quality of these companies’ bond holdings
(Figure 5).
Figure 5. Average Bond Allocation by NAIC Credit Quality Classification for Four Major Mutual Life Insurance
Companies
0%
10%
20%
30%
40%
50%
60%
70%
80%
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Class 1 Class 2 Class 3-6
Dividend Interest Rates for 2015 (continued)
9. 9
The percentage of bond holdings allocated to the highest NAIC Class rating has declined to 58% in 2014 (from 72%
in 1995). At the same time, the allocation to lower rated NAIC Class 2 bonds has increased to 34% in 2014 (from 21%
in 1995). According to the NAIC, the Moody’s ‘Baa’ rating is equivalent to its Class 2 bond rating. While a ‘Baa’ rating
represents a relatively low-risk bond or investment, it is toward the bottom of the investment-grade category.
Figure 6 shows a comparison of DIRs to both the seven-year rolling average of the Moody’s ‘Aaa’ and lower rated
‘Baa’ Long-Term Corporate Bond Yield Averages.
Figure 6. Seven-Year Rolling Average of Moody’s ‘Aaa’ and ‘Baa’ Long-Term Corporate Bond Yield Averages &
Insurance Company DIRs (1986–2015)
4
5
6
7
8
9
10
11
12
13
14
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
%
Moody's Aaa Benchmark Moody's Baa 7-yr Rolling Average
Guardian MassMutual
New York Life Northwestern Mutual
Since 2000, there has been a stronger correlation between DIRs and the ‘Baa’ Benchmark as compared to the ‘Aaa’
Benchmark. After reaching a low point of 68 basis points in 1999, the additional yield provided by ‘Baa’ versus ‘Aaa’
has increased to 125 basis points in 2015. The increase in allocation and yield for Class 2/’Baa’ bonds could at least
partially explain the increase in the divergence between dividend interest rates and the Moody’s ‘Aaa’ Benchmark.
Dividend Interest Rates for 2015 (continued)
10. For More
Information
M Financial Group
1125 NW Couch Street, Suite 900
Portland, OR 97209
800.656.6960
www.mfin.com
10
Correlation Between DIRs and Annual Insurance Company Invest-
ment Returns
DIRs are also correlated to the investment returns generated by the insurance
company. While investment returns are only publicly available for each company’s
entire invested asset portfolio (and not for the specific segregated general accounts by
product type), over periods of time it can be observed that a company’s DIR will tend
to move in the same direction as its annual net investment yield (a measure of net
investment income divided by annual average invested assets) and total return (net
investment yield plus realized capital gains/losses2). Appendix A contains charts for
each of the mutual life insurance companies showing their DIR along with their net
yield, total return, and the Moody’s ‘Aaa’ Benchmark as of the end of the prior year
for the past 10 years.
The charts show the DIRs generally correlate with both the respective companies’
net yield and total return. At the height of the financial crisis in 2009, life insurance
companies recorded losses due to asset impairments, which are reflected in their net
yield and total returns, driving down DIRs. Since the financial crisis, life insurance
companies have been able to either greatly reduce realized capital losses or even
achieve realized capital gains, which have positively supported DIRs.
Summary
DIRs are complex and “black-box” in nature; they are not UL crediting rates.
DIRs may be impacted by mortality and expense experience and can be calculated
differently from company to company. Therefore, the absolute value of DIRs should
not be compared.
Over long periods of time, the historical tendency for annual changes in DIRs had
trended with the annual changes in fixed income benchmarks (such as the Moody’s
‘Aaa’ or ‘Baa’ Long-Term Corporate Bond Yield Average). DIRs can diverge from
fixed income benchmarks over the short term (since life insurers may shift their asset
allocation when opportunities arise to enhance yield). However, life insurers are also
sensitive to risk, which limits the magnitude of shifts in their asset allocations.
Therefore, it is likely for the foreseeable future that life insurers will remain heavily
invested in bonds and mortgages, with a high percentage of those investments made
in investment grade securities (NAIC Classes 1 and 2), resulting in DIR changes that
will tend to continue to be correlated to changes in fixed income benchmarks.
2 The charts in Appendix A include a measure labeled “Net Yield + Realized G/L.” This measure equals net investment
income, plus realized capital gains/losses, minus transfers to the Investment Maintenance Reserve (IMR), plus amortization
of IMR. Unrealized gains, which are often included in “total return,” are not included for the purposes of this M Intelligence
piece.
Dividend Interest Rates for 2015 (continued)
To learn more, please
contact a member of
M Financial’s Product
Management team.
Wayne Tonning
503.414.7430
wayne.tonning@mfin.com
Dennis McMahan
503.414.7358
dennis.mcmahan@mfin.
com
Jennifer Lachnite
503.414.7348
jennifer.lachnite@mfin.com
Derrick Hanson
503.414.7234
derrick.hanson@mfin.com
This information has been taken
from sources we believe to be reliable
but there is no guarantee as to
its accuracy. This material is not
intended to present an opinion on
legal or tax matters. Please consult
with your attorney or tax advisor, as
applicable.
11. 11
Guardian Insurance Company of America
The analysis leading to the movement of the company’s DIR is unclear when charted against the company’s net yield
and total return. In fact, from 2006 through 2009, the DIR appears to move almost inversely with movements of net
yield and total return. This pattern seemed to continue in 2015 as Guardian reported a marked increase in investment
performance but reduced its DIR by 20 bps.
An important observation for Guardian, as well as the other companies in this report, is the dividend rates are higher
than their reported investment rates of return. This should serve to emphasize that whole life dividend rates are
not comparable to universal life crediting rates, which generally do correspond to carrier investment rates of return.
4.5
5.0
5.5
6.0
6.5
7.0
7.5
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
%
Guardian
Moody's Benchmark Net Yield
Total Return (including RCG/L) Dividend Rate
Appendix A: Mutual Life Insurance Company Annual DIRs, Net Yields, and Total Returns
12. 12
Massachusetts Mutual Life Insurance Company
Historically, Mass Mutual’s DIR has correlated well with its net yield. However, the spread between the DIR and net
yield has increased to 173 bps in 2015 (from 112 bps in 2004). Realized capital gains have generally been negative over
the last eight years, making it unclear whether they are responsible for the widening spread in recent years.
Mass Mutual stated that its 2015 dividend payout “reflects…the distribution of other business earnings from the
company’s asset management and non-participating businesses.”3 According to Mass Mutual’s 2014 annual statutory
financial filing with the state of Massachusetts, investment income from stock holdings in affiliated companies
contributed approximately 1% to Mass Mutual’s investment income, which would equate to about 5 bps in yield. In
the years 2009–2013, the ratio ranged from less than 1 bp to 5 bps.
The value of a stock holding in an affiliate company named MassMutual Holding LLC has appreciated in value from
$1.2 billion in 2008 to more than $5.5 billion in 2014 (Mass Mutual’s invested assets were reported at more than $133
billion at year-end 2014.) However, since this would be classified as an unrealized capital gain, it is unclear how the
growth in the value of this asset would translate to higher dividends for policyholders.
3 Company press release from November 3, 2014. https://www.massmutual.com/about-us/news-and-press-releases/press-releases/2014/11/massmutual-approves-
historic-$1-billion-dividend-payout-for-policyowners
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
%
Mass Mutual
Moody's Benchmark Net Yield
Total Return (including RCG/L) Dividend Rate
Appendix B: Mutual Life Insurance Company Annual DIRs, Net Yields, and Total Returns
13. 13
New York Life Insurance Company
From 2008 to 2012, New York Life’s DIR decreased in a similar pattern to the company’s net yield and total return.
In 2013, the net yield decreased from the prior year but the DIR was increased from 2012. Despite relatively flat
investment returns since 2012, New York Life’s DIR has increased by 40 bps during that same time period.
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
%
New York Life
Moody's Benchmark Net Yield
Total Return (including RCG/L) Dividend Rate
Appendix C: Mutual Life Insurance Company Annual DIRs, Net Yields, and Total Returns
14. 14
Northwestern Mutual Life Insurance Company
A significant spread existed between Northwestern Mutual’s DIR and net yield in 2006–2008. Capital gains in the
time period may have been supportive of the DIR as represented by the total returns. Between 2008 and 2013, the
spread between the DIR and net yield has narrowed substantially. Since 2013, Northwestern Mutual’s total return has
been aided by capital gains and the company’s DIR has held steady.
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
%
Northwestern Mutual
Moody's Benchmark Net Yield
Total Return (including RCG/L) Dividend Rate
Appendix D: Mutual Life Insurance Company Annual DIRs, Net Yields, and Total Returns