Month: January 2022

NAIC launches review of private equity-owned insurer issues

Mary Pat Campbell

Link:https://www.dlapiper.com/en/us/insights/publications/2021/12/naic-launches-review-of-private-equity-owned-insurer-issues/

Excerpt:

On December 7, the National Association of Insurance Commissioners (NAIC) Financial Stability Task Force voted in a virtual meeting to expose, for a 30-day comment period, a list of “Regulatory Considerations Applicable (But Not Exclusive) to Private Equity (PE) Owned Insurers.” The Task Force assigned to its Macroprudential Working Group the role of coordinator of the ongoing evaluation of these considerations.

The decision is the latest public expression of increasing concern among regulators about the recent growth in number and complexity of private equity-owned insurers.

The current exposure has some antecedents in NAIC-directed efforts that began two years ago.  In November 2019, the Statutory Accounting Working Group began an effort to change the Statement of Statutory Accounting Principles (SSAP) No. 25, which provides accounting rules on insurer transactions with related parties and affiliates.

Author(s): Scott Fischer

Publication Date: 9 Dec 2021

Publication Site: DLA Piper

The catastrophe of the Covid models

Mary Pat Campbell

Link:https://www.spiked-online.com/2022/01/21/the-catastrophe-of-the-covid-models/

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Excerpt:

Having taken all the modelling into account, SAGE produced a table that showed in stark terms what the future held if the government stuck to ‘Plan B’. With the usual risible caveat that ‘these are not forecasts or predictions’, they showed a peak in hospitalisations of between 3,000 and 10,000 per day and a peak in deaths of between 600 and 6,000 a day. In previous waves, without any vaccines, deaths had never exceeded 1,250 a day.

The government was effectively given an ultimatum. SAGE offered Johnson a choice between the disaster that would surely unfold and a ‘Step 1’ or ‘Step 2’ lockdown, both of which had been helpfully modelled to give him a steer. ‘Step 1’ was a full lockdown as implemented last January. ‘Step 2’ allowed limited contact with other households but only outdoors.

In the event, as we all know, Boris Johnson ignored the warnings and declined to implement any new restrictions on liberty. A few days later, Robert West, a nicotine-addiction specialist who is on SAGE for some reason, tweeted: ‘It is now a near certainty that the UK will be seeing a hospitalisation rate that massively exceeds the capacity of the NHS. Many thousands of people have been condemned to death by the Conservative government.’

It did not quite turn out that way. Covid-related hospitalisations in England peaked at 2,370 on 29 December and it looks like the number of deaths will peak well below 300. This is not just less than was projected under ‘Plan B’, it is less than was projected under a ‘Step 2’ lockdown. The modelling for ‘Step 2’ showed a peak of at least 3,000 hospitalisations and 500 deaths a day. SAGE had given itself an enormous margin of error. There is an order of magnitude between 600 deaths a day and 6,000 deaths a day and yet it still managed to miss the mark.

Author(s): Christopher Snowdon

Publication Date: 22 Jan 2022

Publication Site: Spiked Online

Actuarial Data Science Tutorials

Mary Pat Campbell

Link: https://www.actuarialdatascience.org/ADS-Tutorials/

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Excerpt:

On this page we present all the tutorials that have been prepared by the working party. We are intensively working on additional ones and we aim to have approx. 10 tutorials, covering a wide range of Data Science topics relevant for actuaries.

All tutorials consist of an article and the corresponding code. In the article, we describe the methodology and the statistical model. By providing you with the code you can easily replicate the analysis performed and test it on your own data.

Author(s): Swiss Association of Actuaries

Publication Date: accessed 20 Jan 2022

Publication Site: Actuarial Data Science

U.S. Inflation Hits 39-Year High of 7%, Sets Stage for Fed Hike

Mary Pat Campbell

Link:https://www.thinkadvisor.com/2022/01/12/u-s-inflation-hits-39-year-high-of-7-sets-stage-for-fed-hike/

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Excerpt:

The consumer price index climbed 7% in 2021, the largest 12-month gain since June 1982, according to Labor Department data released Wednesday. The widely followed inflation gauge rose 0.5% from November, exceeding forecasts.

Excluding the volatile food and energy components, so-called core prices accelerated from a month earlier, rising by a larger-than-forecast 0.6%. The measure jumped 5.5% from a year earlier, the biggest advance since 1991.

The increase in the CPI was led by higher prices for shelter and used vehicles. Food costs also contributed. Energy prices, which were a key driver of inflation through most of 2021, fell last month.

Author(s): Reade Pickert

Publication Date: 12 Jan 2022

Publication Site: Think Advisor

Producer Prices Rise 9.7% for 2021, the Most in Series History

Mary Pat Campbell

Link:https://mishtalk.com/economics/producer-prices-rise-9-7-for-2021-the-most-in-series-history

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Excerpt:

The Producer Price Index for final demand increased 0.2 percent in December. This rise followed advances of 1.0 percent in November and 0.6 percent in October.

On an unadjusted basis, final demand prices moved up 9.7 percent in 2021, the largest calendar-year increase since data were first calculated in 2010.

In December, the advance in the final demand index can be traced to a 0.5-percent increase in prices for final demand services.

Conversely, the index for final demand goods decreased 0.4 percent.

Prices for final demand less foods, energy, and trade services rose 0.4 percent in December following a 0.8-percent increase in November.

In 2021, the index for final demand less foods, energy, and trade services moved up 6.9 percent, following a 1.3-percent advance in 2020.

Author(s): Mike Shedlock

Publication Date: 13 Jan 2022

Publication Site: Mish Talk

Western & Southern acquires Fabric to accelerate digital expansion

Mary Pat Campbell

Link:https://insurance-forums.com/uncategorized/western-southern-acquires-fabric-to-accelerate-digital-expansion/

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Excerpt:

Western & Southern Financial Group announced Jan. 12 it has acquired Fabric Technologies and its subsidiary, Fabric Insurance Agency LLC, which provide a digital life insurance platform and mobile app that the companies say is “serving over 60,000 families and has placed billions of dollars in life insurance coverage.”

Terms of the deal were not disclosed. In a statement, W&S said it and Fabric “share a vision of offering the mass market easy-to-use digital solutions to purchase insurance and other financial services.”

…..

Through its secure digital platform and mobile app, Fabric offers affordable term life insurance, a free last will and testament, tools to organize family finances, and—in partnership with other providers—additional solutions such as college savings plans. The life insurance application takes about 10 minutes to complete, with immediate approval for qualified applicants through Fabric’s digital underwriting process.

Accidental death policies and term life insurance policies are issued by Vantis Life Insurance Company, Windsor Conn. (all states except N.Y.). Fabric Insurance Agency LLC is an insurance agency licensed to sell life and accident insurance products.

Publication Date: 12 Jan 2022

Publication Site: Insurance Forums

Pandemic Spending Slowdown Eased Financial Stress: Survey

Mary Pat Campbell

Link:https://www.thinkadvisor.com/2022/01/11/pandemic-spending-slowdown-eased-financial-stress-survey/

Excerpt:

Despite a two-year pandemic, workers overall are more confident in their financial situation than they’ve been since 2014, according to findings in the eighth annual Stress, Finances, and Well-Being report released today by John Hancock Retirement. That said, overall stress still affects 72% of retirement plan participants surveyed, especially women (79%) and those 36 to 50 years old (77%).

Further, 71% responded said they had experienced stress, depression or loneliness during the past year.

Author(s): Ginger Szala

Publication Date: 11 Jan 2022

Publication Site: Think Advisor

Which Data Fairly Differentiate? American Views on the Use of Personal Data in Two Market Settings

Mary Pat Campbell

Link:https://sociologicalscience.com/articles-v8-2-26/

doi: 10.15195/v8.a2

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Abstract:

Corporations increasingly use personal data to offer individuals different products and prices. I present first-of-its-kind evidence about how U.S. consumers assess the fairness of companies using personal information in this way. Drawing on a nationally representative survey that asks respondents to rate how fair or unfair it is for car insurers and lenders to use various sorts of information—from credit scores to web browser history to residential moves—I find that everyday Americans make strong moral distinctions among types of data, even when they are told data predict consumer behavior (insurance claims and loan defaults, respectively). Open-ended responses show that people adjudicate fairness by drawing on shared understandings of whether data are logically related to the predicted outcome and whether the categories companies use conflate morally distinct individuals. These findings demonstrate how dynamics long studied by economic sociologists manifest in legitimating a new and important mode of market allocation.

Author(s):Barbara Kiviat

Publication Date: 13 Jan 2021

Publication Site: Sociological Science

A Politicized Fed Endangers the Economy

Mary Pat Campbell

Link:https://www.wsj.com/articles/a-politicized-fed-endangers-economy-monetary-federal-reserve-powell-balance-sheet-climate-stress-test-social-justice-11642448983

Excerpt:

It is time to depoliticize monetary policy. First, instead of making the Fed’s mandate broader, Congress should consider narrowing it to one of price stability. The Fed’s contribution to achieving full employment should be through focusing on long-term price stability. Next, as we learn to live with Covid and as the economy continues to recover, the Fed must go beyond merely tapering its bond purchases. It must set out a credible process and timetable to unwind its balance sheet.

Should the Fed be called on again to exercise emergency powers, Congress must ensure those powers are of limited duration and that any credit facilities created are quickly transferred to the Treasury Department. Finally, the more improvisational and discretionary the Fed’s conduct of monetary policy, the more difficult it is to withstand political pressures. The Fed should move to a monetary-policy framework that is more systematic, predictable and transparent.

If politicized monetary policy doesn’t prove transitory, it is doubtful the Fed will be able to deliver either stable prices or maximum employment.

Author(s): Jeb Hensarling

Publication Date: 17 Jan 2021

Publication Site: WSJ

How High Are Federal Interest Payments?

Mary Pat Campbell

Link:https://www.crfb.org/papers/how-high-are-federal-interest-payments

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Excerpt:

Even with exceptionally low interest rates, the federal government is projected to spend just over $300 billion on net interest payments in fiscal year 2021. This amount is more than it will spend on food stamps and Social Security Disability Insurance combined. It is nearly twice what the federal government will spend on transportation infrastructure, over four times as much as it will spend on K-12 education, almost four times what it will spend on housing, and over eight times what it will spend on science, space, and technology. 

Publication Date: 10 Mar 2021

Publication Site: Committee for a Responsible Federal Budget

Visualizing the 700-Year Fall of Interest Rates

Mary Pat Campbell

Link: https://www.visualcapitalist.com/700-year-decline-of-interest-rates/

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Excerpt:

Today’s graphic from Paul Schmelzing, visiting scholar at the Bank of England (BOE), shows how global real interest rates have experienced an average annual decline of -0.0196% (-1.96 basis points) throughout the past eight centuries.

The Evidence on Falling Rates

Collecting data from across 78% of total advanced economy GDP over the time frame, Schmelzing shows that real rates* have witnessed a negative historical slope spanning back to the 1300s.

Displayed across the graph is a series of personal nominal loans made to sovereign establishments, along with their nominal loan rates. Some from the 14th century, for example, had nominal rates of 35%. By contrast, key nominal loan rates had fallen to 6% by the mid 1800s.

Author(s): Dorothy Neufeld

Publication Date: 4 Feb 2020

Publication Site: Visual Capitalist