Traditional Life Insurance Products are Under Pressure
Gregor Wolters and Sven Panz
Low Interest Rate Environments and Consequences
Risks Faced by Writers of Investment Guarantees
Variable Annuity in Asia post-2008
How did Variable Annuities Fare in the Crisis?
Traditional Life Insurance Products are Under Pressure
An Overview of Regulatory Requirements
Simulations
Economic Scenario Generators and Variable Annuities
Modelling and Managing Policyholder Behavioural Risks
Modelling and Managing Mortality and Longevity Risks
Valuation of Variable Annuity Guarantees
Understanding and Using Reinsurance Treaties for Guaranteed Products
Hedging of Long-term Fund-linked Exotic Options
Overview of Commonly Used Risk Management Strategies
Taxonomy of Equity, Interest Rate, Hybrid and Customised Derivatives Used for Risk Management
Managing Risks Underlying Variable Annuity Liabilities
Basis Risk
Measuring Hedge Effectiveness
Measuring and Reporting Hedge Efficiency
Eight Important Questions Practitioners Should Ask When Managing Equity-linked Insurance Guarantee Risks
Due to the prevailing low interest rate environment, traditional life insurance products that contain longer-dated guarantees (especially these with guaranteed returns) are becoming increasingly expensive to offer for life insurance companies in Europe. The introduction of regulatory capital regimes like the Swiss Solvency Test (SST) and Solvency II (SII) makes this transparent and additionally leads to further capital requirements for such products. Hence, insurance companies show a strong interest in reducing capital requirements by reshuffling their product offering.
Savings-oriented life insurance products can be attractive, as they offer risk transfer, compensation for inflation, a reasonable capital growth, certainty of investment guarantees and savings for retirement, as well as tax benefits. There is still a reasonable need for these offerings and therefore these products are still in demand from retail clients. New kinds of life insurance policies with a savings and investment element have to combine safe minimum redemption amounts with attractive upside participation. On the other hand, the product design should result in lower risk capital requirements for the insurer
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