Canadian Institute of Actuaries L�Institut canadien des actuaires - Get as PowerPoint

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					Canadian             L’Institut
 Institute           canadien
        of           des
Actuaries            actuaires
2009 Seminar for the Appointed Actuary
 Colloque pour l’actuaire désigné 2009
         PD -2 (Life)

The Actuary and Changing Times


          John Brierley
RBC Life Invested Assets

                  AAA Government Bonds
                  AA Corporate Bonds
                  AA Government Bonds
                  AA Corporate Bonds
                  A Government Bonds
                  A Corporate Bonds
                  BBB Government Bonds
                  BBB Corporate Bonds
                  BB: Government
                  BB Corporate Bonds
                  Equities/Futures
                  Commercial Mortgages
                  Loans on Policies
                  Cash & short term
RBC Life Liabilities



                Non-Par Life
                Universal Life
                Individual Health
                Group Life and Health
                Annuity
                Participating Life
                Segregated Funds
      RBC Insurance

Canadian Life
Canadian Home and Auto
Canadian Travel
US Life
US Travel
International Reinsurance
       RBC
Bank         Insurance
                  Impacts

• Asset Defaults:
   – None in Canadian Life
   – Minor elsewhere in other insurance
• Equities:
   – Very small segregated fund portfolio
   – Material impact in traditional life
• Disability:
   – Less impact than expected from an economic
     downturn
               Impacts

• Lower interest rates
  – Provide for 50% excess credit spread
  – Keeping ahead of ultimate
    reinvestment rate reductions
  – Looks a lot like last year’s DCAT
    adverse interest rate scenario
• Asset Extension
  – Better matching generated liability
    reductions in CALM
              Impacts

• Small income impact from volatility
  in the Initial Reinvestment Rate:
  – Market value change on excess HFT
    assets tends to offset much of the
    impact of IRR changes
• Quarterly income volatility from
  equity assets held in the general
  account
              Impacts

• Investment Restrictions:
  – Tight money lending conditions
  – Asset sector limits
  – Limitation on commercial mortgages
                  Impacts

• Universal Life
  – Less change in policyholder behaviour
    than expected
     • Deposits still being made
     • No significant difference in fund transfers
       or partial surrenders
     • Policy lapses not significantly impacted
                Summary

•   No impact from asset default
•   Equity market downturn noticeable
•   Providing for lower interest rates
•   Disability experience slightly adverse
•   Universal Life neutral
•   Asset extension favourable to income
•   Limitations in asset choices

• “not really that bad a year”

				
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