Asset Liabilities Management Alm by uob19357

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Asset Liabilities Management Alm document sample

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									ALM Assessment                                                                                                             Name of Insurer                                                                                               Name of Assessor




 Sort Reg Item Element                Strong = 4                            Acceptable = 3                                    Needs Improvement = 2                       Weak = 1 or 0                             Rating Explanation
 1.00 2.1   1 Existence of            Formal ALM program exists and         Formal ALM program exists and                     No formal ALM program. Some                 No formal ALM program, active
               ALM program            covers all main elements described in covers most main elements described               elements of ALM exist, such as active       management of liquidity, or stress
                                      the regulation.                       in the regulation. Necessary action is            management of liquidity. Stress             testing (other than DCAT).
                                                                            being taken to improve its scope and              testing is limited to DCAT.
                                                                            effectiveness.
 1.05 2.1      7   Level of          The sophistication of the strategies,  The sophistication of the strategies,             The sophistication of the strategies,       The strategies, processes, and models
                   sophistication of processes, and models used are fully processes, and models used are                      processes, and models used are too          used are inadequate in relation to the
                   the ALM program commensurate with the nature, scale, acceptable in relation to the nature,                 basic to fully capture the nature,          nature, scale, and complexity of the
                                     and complexity of the risk exposures. scale, and complexity of the risk                  scale, and complexity of the risk           risk exposures.
                                                                            exposures, but some strengthening is              exposures.
                                                                            desirable.
 1.10 2.1      2   Objectives        Objectives appropriately balance risks Objectives appropriately balance risks            Objectives exist but are unclear,           No quantitative or qualitative
                                     and rewards and reflect the insurer’s and rewards, but do not appear to                  incomplete, or otherwise inadequate         objectives have been established for
                                     assessment of policyholders’           take policyholders’ expectations into             as a basis for ALM.                         ALM.
                                     expectations.                          account.
 1.15 2.2      9   Economic basis    The ALM program is based on            The ALM program considers                         The ALM program is based on a               The ALM program is based on a very
                   of ALM            economic value and considers the       economic value, but objectives are                variety of short-term measures of           few short-term measures of financial
                                     change in economic value that will     largely focused on short-term                     financial performance, such as              performance, for example, focusing
                                     arise from a range of plausible        measures of financial performance.                earnings, regulatory solvency               solely on the liquidity ratio.
                                     scenarios. Accounting and regulatory                                                     requirements, and liquidity ratios.
                                     requirements are reflected as
                                     constraints on the cash flows valued.

 1.20 2.3     13 Development of       Senior management is actively                Senior management reviews and              Senior management reviews the ALM           Senior management reviews the ALM
                 ALM policy           involved in the development of ALM           understands the ALM policy                 policy developed by others, but may         policy developed by others, and some
                                      policy and is supportive of it.              developed by staff, and is supportive      not fully understand or be actively         members of senior management have
                                                                                   of it.                                     supportive of it.                           significant concerns with it.

 1.25 3.1     19 Content of ALM       The ALM policy includes clear and            The ALM policy includes appropriate        The ALM policy includes descriptions        The ALM policy lacks descriptions of
                 policy               appropriate descriptions of all of the       descriptions of all of the following:      of all of the following: objectives; risk   one or more of the following:
                                      following: objectives; risk tolerance;       objectives; risk tolerance; nature of      tolerance; nature of the risks; metrics     objectives; risk tolerance; nature of
                                      nature of the risks; metrics used to         the risks; metrics used to measure the     used to measure the risks; strategy for     the risks; metrics used to measure the
                                      measure the risks; strategy for              risks; strategy for managing the risks;    managing the risks; and                     risks; strategy for managing the risks;
                                      managing the risks; and                      and responsibilities of those involved     responsibilities of those involved in       and responsibilities of those involved
                                      responsibilities of those involved in        in the implementation of ALM. Some         the implementation of ALM. Some of          in the implementation of ALM. Some
                                      the implementation of ALM.                   of the information is unclear.             the information is inappropriate or         of the information might also be
                                                                                                                              unclear.                                    inappropriate or unclear.

 1.30 2.1      6   Formulation of     Processes exist to ensure the                The business and professional              Responsibility for the formulation of       No ALM strategies have been
                   ALM strategies     application of a wide range of               judgement of functional specialists,       ALM strategies is left to functional        formulated.
                                      business and professional judgement          such as the actuary and investment         specialists, such as the actuary and
                                      to the results of the risk analysis in the   officer, are applied to the results of     investment officer. There is little
                                      formulation of ALM strategies.               the risk analysis in the formulation of    discussion of the strategies with
                                                                                   ALM strategies. Senior management          senior management.
                                                                                   reviews and concurs with the
                                                                                   strategies.




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ALM Assessment                                                                                                               Name of Insurer                                                                                              Name of Assessor




 Sort Reg Item Element                Strong = 4                                  Acceptable = 3                                Needs Improvement = 2                       Weak = 1 or 0                            Rating Explanation
 1.35 3.3 23 Content of ALM           The ALM strategy includes clear and         The ALM strategy includes clear and           The ALM strategy is either unclear or       The ALM strategy might be seriously
               strategy               complete descriptions of the manner         complete descriptions of the manner           incomplete in describing the manner         deficient in describing the manner in
                                      in which each category of risk will be      in which each category of risk will be        in which each category of risk will be      which each category of risk will be
                                      measured and managed, taking                measured and managed, and specific            measured and managed. It might lack         measured and managed. It might be
                                      account of the interactions between         strategies in respect of blocks of            specific strategies in respect of blocks    inconsistent with the risk tolerance,
                                      various risks; and specific strategies      business whose risk characteristics           of business whose risk characteristics      liquidity position, or solvency position
                                      in respect of blocks of business whose      materially differ from one another.           materially differ from one another, or      of the insurer. It might also be
                                      risk characteristics materially differ      However, it might not take explicit           fail to take explicit account of the        inconsistent with one or more of the
                                      from one another, taking account of         account of the interactions between           interactions between various risks or       other risk management policies of the
                                      the interactions between various            various risks or blocks of business. It       blocks of business. It takes account of     insurer, or fail to adequately describe
                                      blocks of business. It takes account of     takes account of the risk tolerance,          the risk tolerance, liquidity position,     the processes used to implement and
                                      the risk tolerance, liquidity position,     liquidity position, and solvency              and solvency position of the insurer. It    monitor the results of the strategy.
                                      and solvency position of the insurer. It    position of the insurer. It is consistent     might be inconsistent with one or
                                      is consistent with and describes            with the other risk management                more of the other risk management
                                      linkages to the other risk management       policies of the insurer, but might not        policies of the insurer. It describes the
                                      policies of the insurer. It describes the   describe the linkages to those                processes used to implement and
                                      processes used to implement and             policies. It describes the processes          monitor the results of the strategy.
                                      monitor the results of the strategy.        used to implement and monitor the
                                                                                  results of the strategy.

 1.40 2.3     14 Approval of ALM The board of directors approved the              The board of directors approved the           The board of directors approved the         The board of directors has not
                 policy          ALM policy, after taking account of              ALM policy, after considering some            ALM policy, based on a presentation         approved the ALM policy, or has
                                 the asset-liability relationships, risk          of the following factors: the asset-          by senior management and with little        approved it without discussion.
                                 tolerance, long-term risk and return             liability relationships, risk tolerance,      discussion.
                                 requirements, liquidity requirements,            long-term risk and return
                                 and solvency position of the insurer.            requirements, liquidity requirements,
                                                                                  and solvency position of the insurer.
 1.45 2.3     15 Senior             Senior management is actively                 Senior management passively                   Senior management leaves the                Senior management impedes the
                 management         involved in ensuring the successful           supports the implementation of the            implementation of the ALM policy to         implementation of the ALM policy,
                 responsibility for implementation of the ALM policy.             ALM policy.                                   functional specialists, such as the         for example, by acting in a manner
                 implementation of                                                                                              actuary and investment officer, with        contrary to its objectives or by failing
                 ALM policy                                                                                                     little ongoing involvement.                 to provide necessary resources.

 1.50 2.3     16 Integration of       The ALM program is an integral part         The ALM program operates as an                The ALM program operates as                 The ALM program operates primarily
                 ALM                  of the insurer’s governance and             adjunct to the insurer’s governance           financial-management activity of            as reporting activity of the actuary.
                                      business activities. ALM is usually         and business activities. ALM is               functional specialists, such as the         ALM is rarely, if ever, considered in
                                      considered in the context of business       sometimes considered in the context           actuary and investment officer. ALM         the context of business activities.
                                      activities such as planning, product        of business activities such as                is seldom considered in the context of
                                      development, pricing, and                   planning, product development,                business activities such as planning,
                                      performance assessment.                     pricing, and performance assessment.          product development, pricing, and
                                                                                                                                performance assessment.

 1.55 2.3     18 Assessment of        Senior management and the board of          Senior management and the board of            Senior management and the board of          Senior management and the board of
                 effectiveness        directors assess the effectiveness of       directors assess the effectiveness of         directors assess the effectiveness of       directors assess the effectiveness of
                                      the ALM program annually or more            the ALM program annually. The                 the ALM program annually. The               the ALM program less frequently than
                                      frequently. The ALM policy and its          ALM policy and its implementation             ALM policy and its implementation           annually. The ALM policy and its
                                      implementation are promptly revised,        are sometimes revised, as appropriate,        are rarely revised to ensure that the       implementation are rarely revised to
                                      as appropriate, to ensure that the          to ensure that the ALM program is             ALM program is effective and                ensure that the ALM program is
                                      ALM program is effective and                effective and responds to changes in          responds to changes in the business         effective and responds to changes in
                                      responds to changes in the business         the business and the external                 and the external environment.               the business and the external
                                      and the external environment.               environment.                                                                              environment.




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ALM Assessment                                                                                                         Name of Insurer                                                                                                 Name of Assessor




 Sort Reg Item Element            Strong = 4                                   Acceptable = 3                              Needs Improvement = 2                       Weak = 1 or 0                              Rating Explanation
 2.00 2.1   3 Risk identification Formal process for identifying all           Risks arising from the insurer’s assets     Identification of risks is limited to the   No formal process exists to identify
                                  material risks arising from the              and liabilities and their interaction are   review and discussion of DCAT               risks. If DCAT is performed, its
                                  insurer’s assets and liabilities and         identified using quantitative analyses,     results.                                    results are not used in the context of
                                  their interaction, using both interview      supplemented by board and senior                                                        ALM.
                                  techniques and quantitative analyses.        management discussion.

 2.05 2.1      4   Risk analysis      Qualitative and quantitative analysis                                        Qualitative analysis of the underlying
                                                                               Qualitative analysis of the underlying                                                  Little or no qualitative or quantitative
                                      of the underlying causes of each risk,                                       causes of each risk, but with
                                                                               causes of each risk, the relationships                                                  analysis of the underlying causes of
                                      the relationships between various        between various risks, and the      inadequate attention to the                         risks.
                                      risks, and the relationships between     relationships between risks and     relationships between various risks,
                                      risks and external factors.              external factors.                   and the relationships between risks
                                                                                                                   and external factors.
 2.10 4.1     27 Embedded options The ALM tools and techniques             The ALM tools and techniques            The ALM tools and techniques                        The ALM tools and techniques
                                  employed by the insurer take into        regularly employed by the insurer do regularly employed by the insurer do                   regularly employed by the insurer do
                                  account risks posed by options           not take into account risks posed by    not take into account risks posed by                not take into account risks posed by
                                  embedded in both assets and              options embedded in its assets and      options embedded in its assets and                  options embedded in its assets and
                                  insurance policies, and are used to      insurance policies. However, separate insurance policies. However,                          insurance policies. The insurer has not
                                  assess the effects such embedded         quantitative analyses have been         qualitative consideration has been                  considered the effects such embedded
                                  options might have throughout the life performed to assess the effects such      given to the effects such embedded                  options might have throughout the life
                                  of the insurance policies.               embedded options might have             options might have throughout the life              of the insurance policies.
                                                                           throughout the life of the insurance    of the insurance policies.
                                                                           policies.
 2.15 2.1     8 Risks covered by The ALM program covers all risks          The ALM program covers the most         Some significant risks requiring the                The ALM program is narrowly
                 the ALM program requiring the coordination of assets      significant risks requiring the         coordination of assets and liabilities              focused, covering only limited aspects
                                  and liabilities including (to the extent coordination of assets and liabilities, are not covered by the ALM program.                 of the risks requiring the coordination
                                  relevant) liquidity risk, market risk,   but some risks are not dealt with to as                                                     of assets and liabilities.
                                  and underwriting risk.                   fully as would be commensurate with
                                                                           the risk exposures.
 2.20 2.2     12 Risk metrics     The ALM program incorporates a           The ALM program incorporates a          The ALM program incorporates at                     Risk metrics are limited to regulatory
                                  variety of appropriate risk metrics to limited number of appropriate risk        least one appropriate risk metric to                compliance measures, such as
                                  measure the exposure of economic         metrics to measure the exposure of      measure the exposure of economic                    liquidity and capital adequacy ratios.
                                  value to risks, providing a              economic value to risks, providing a    value to risks, but the risk metrics
                                  comprehensive view of risk.              reasonably complete view of risk.       provide an incomplete view of risk.
 2.25 4.1     26 Measurement of The insurer uses appropriate metrics The insurer uses appropriate metrics The insurer uses metrics to measure                          The insurer does not measure its
                 market risk      to measure exposure to market risk       to measure exposure to market risk      exposure to market risk and related                 exposure to market risk and related
                                  and related credit risk. The             and related credit risk. The            credit risk. However, the                           credit risk.
                                  sophistication of the models is fully    sophistication of the models is         sophistication of the models is
                                  commensurate with the complexity of acceptable in relation to complexity of inadequate in relation to complexity
                                  its portfolios of products and           its portfolios of products and          of its portfolios of products and
                                  investments.                             investments.                            investments.
 2.30 2.1     5 Quantification of The level of risk exposure is            The level of risk exposure is           The level of risk exposure is                       The level of risk exposure has not
                 risk exposure    quantified using appropriate             quantified using appropriate            quantified, but the techniques used do              been quantified.
                                  techniques, and the expected rewards techniques, but the expected rewards not capture all relevant and material
                                  and costs associated with the risk       and costs associated with the risk      risks.
                                  exposure are assessed.                   exposure are not explicitly assessed.




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ALM Assessment                                                                                                          Name of Insurer                                                                                               Name of Assessor




 Sort Reg Item Element                Strong = 4                                Acceptable = 3                              Needs Improvement = 2                      Weak = 1 or 0                             Rating Explanation
 2.35 3.2 20 Risk tolerance           The risk tolerance statement sets out     The risk tolerance statement sets out       The risk tolerance statement is            The risk tolerance statement is either
               statement              quantitative and qualitative tolerance    quantitative and qualitative tolerance      incomplete, for example, setting out       nonexistent or seriously deficient in
                                      levels overall, together with tolerance   levels overall, together with tolerance     tolerance levels overall but not for       terms of completeness or the manner
                                      limits for each relevant and material     limits for each relevant and material       each relevant and material category of     in which risk tolerance is expressed.
                                      category of risk, taking into account     category of risk, but does not take         risk (or vice versa), or setting out
                                      the relationships between these risk      into account the relationships between      qualitative but not quantitative
                                      categories. The manner in which risk      these risk categories. The manner in        tolerance levels (or vice versa). It
                                      tolerance is expressed and reported is    which risk tolerance is expressed and       might also fail to take into account the
                                      commensurate with the nature, scale,      reported is commensurate with the           relationships between risk categories.
                                      diversity, and complexity of the          nature, scale, diversity, and
                                      business.                                 complexity of the business.

 2.40 3.2     21 Risk tolerance       The risk tolerance levels are fully       The risk tolerance levels are largely       The risk tolerance levels are              The risk tolerance levels are
                 levels               consistent with the objectives,           consistent with the objectives and          inconsistent with the objectives and       inconsistent with the solvency
                                      management philosophy, and                management philosophy of the                management philosophy of the               position of the insurer.
                                      solvency position of the insurer.         insurer, and fully consistent with its      insurer, but fully consistent with its
                                                                                solvency position.                          solvency position.
 3.00 4.1     24 Tools and            The insurer employs tools and             The insurer employs tools and               The insurer employs tools and              The insurer employs tools and
                 techniques           techniques for the measurement and        techniques for the measurement and          techniques for the measurement and         techniques for the measurement and
                                      management of risks fully                 management of risks acceptable in           management of risks that do not            management of risks that are seriously
                                      commensurate with the nature, scale,      relation to the nature, scale, diversity,   readily or appropriately deal with the     inadequate in relation to the nature,
                                      diversity, and complexity of its          and complexity of its business. They        nature, scale, diversity, and              scale, diversity, and complexity of its
                                      business. They are capable of             are capable of producing a firm-wide        complexity of its business. They are       business. They are incapable of
                                      producing a firm-wide measurement         measurement of risks, but such              incapable of producing a firm-wide         producing a firm-wide measurement
                                      of risks, and such measurement is         measurement might not be regularly          measurement of risks.                      of risks.
                                      produced and used.                        produced and used.

 3.05 4.1     25 Data                 The insurer has developed and             The insurer has developed and               The insurer has developed and              The insurer has not developed, or
                                      maintains sufficient, appropriate, and    maintains sufficient, appropriate, and      maintains data to enable the use of its    does not regularly maintain, the data
                                      reliable data to enable the effective     reliable data to enable the effective       ALM tools and techniques. However,         needed to support the effective use of
                                      use of its ALM tools and techniques.      use of its ALM tools and techniques.        the data is not always sufficient,         ALM tools and techniques.
                                      The data is readily available when        However, the data is not always             reliable, or readily available when
                                      needed.                                   readily available when needed.              needed.

 3.10 2.3     17 Acting on            The information produced by ALM is        The information produced by ALM is The information produced by ALM is                  The information produced by ALM is
                 information          actionable, and timely and appropriate    actionable, and action is usually taken difficult to act on, but action is             difficult to act on, and action is
                                      action is taken in response to such       in response to such information.         sometimes taken in response to such           seldom taken in response to such
                                      information.                                                                       information.                                  information.
 3.15 3.2     22 Application of       Risk tolerance is reflected in the ALM    Risk tolerance is reflected in the ALM Risk tolerance is reflected in the ALM          Risk tolerance is not reflected in the
                 risk tolerance       strategy and actively applied within      strategy, but is not as actively applied strategy, but is not applied within the       ALM strategy, nor is it applied within
                                      the ALM program. Defined risk             within the ALM program as it should ALM program.                                       the ALM program.
                                      tolerance limits are embedded in          be. Defined risk tolerance limits are
                                      ongoing operations through risk           not embedded in ongoing operations
                                      management policies and procedures.       through risk management policies and
                                                                                procedures.




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ALM Assessment                                                                                                          Name of Insurer                                                                                            Name of Assessor




 Sort Reg Item Element                Strong = 4                                 Acceptable = 3                             Needs Improvement = 2                     Weak = 1 or 0                           Rating Explanation
 3.20 4.2 28 Forecasts of cash        The insurer prepares forecasts of cash     The insurer prepares forecasts of cash     The insurer prepares forecasts of cash    The insurer does not prepare forecasts
               flows                  flows from its assets and liabilities      flows from its assets and liabilities.     flows from its assets and liabilities.    of cash flows from its assets and
                                      that include assumptions on the likely     However, the forecasts do not              However, the forecasts might not          liabilities that would be useful in the
                                      behavioural responses of key               explicitly reflect assumptions on the      explicitly reflect assumptions on the     management of liquidity risk.
                                      counterparties and policyholders to        likely behavioural responses of key        likely behavioural responses of key
                                      changes in conditions. The granularity     counterparties and policyholders to        counterparties and policyholders to
                                      and time horizon of such forecasts,        changes in conditions. The granularity     changes in conditions. The granularity
                                      and the frequency with which they are      and time horizon of such forecasts,        and time horizon of such forecasts, or
                                      updated, are commensurate with the         and the frequency with which they are      the frequency with which they are
                                      nature of the portfolios of assets and     updated, are commensurate with the         updated, are not commensurate with
                                      liabilities.                               nature of the portfolios of assets and     the nature of the portfolios of assets
                                                                                 liabilities.                               and liabilities.

 3.25 2.2     10 Derivation of    To the extent possible, cash flows and         Models are used that recognise             Cash flow projections are based           Either asset cash flows or liability
                 cash flow        their values are derived by direct             changes in cash flows, and changes in      solely on best estimates of future        cash flows, or both, are not explicitly
                 projections      observation or by considering                  the economic value of those cash           experience, rather than a range of        projected.
                                  replicating portfolios. If not, then           flows, that will arise from a range of     plausible scenarios.
                                  models are used that recognise                 plausible scenarios. Limited or no use
                                  changes in cash flows, and changes in          is made of direct observation and the
                                  the economic value of those cash               consideration of replicating portfolios.
                                  flows, that will arise from a range of
                                  plausible scenarios.
 3.30 2.2     11 Realism of the   Models are regularly calibrated to             Models are occasionally calibrated to      Models are seldom calibrated to           Models are not calibrated to
                 cash flow models appropriate observable market prices           appropriate observable market prices.      appropriate observable market prices.     appropriate observable market prices.
                                  and take into account the specific             Models do not fully account for the        Models do not fully account for the       Models do not fully account for the
                                  variability in cash flows that is              specific variability in cash flows that    specific variability in cash flows that   specific variability in cash flows that
                                  inherent in some products, such as             is inherent in some products, but the      is inherent in some products, but the     is inherent in some products, but the
                                  exposure to catastrophe risk.                  users apply judgement to compensate        users apply judgement to compensate       users do not appear to compensate for
                                                                                 for this.                                  for this.                                 this.
 3.35 4.2     29 Liquidity risk       The insurer actively monitors its          The insurer actively monitors its          The insurer infrequently monitors its     The insurer manages liquidity
                 management           liquidity position and structures its      liquidity position and structures its      liquidity position, but does take         reactively, responding to cash flows
                                      assets so that it has sufficient cash      assets so that it has sufficient cash      account of anticipated large cash         largely as the occur, with little or no
                                      and diversified marketable securities      and diversified marketable securities      outflows and structures its assets so     use of cash flow projections.
                                      to meet its obligations as they fall       to meet its obligations as they fall       that it has sufficient cash and
                                      due. The insurer maintains a cushion       due. The insurer maintains a cushion       diversified marketable securities to
                                      of liquid assets sufficient to deal with   of liquid assets sufficient to deal with   meet its obligations as they fall due.
                                      both routine fluctuations in the level     routine fluctuations in the level and      The insurer maintains a cushion of
                                      and timing of obligations and              timing of obligations, but not adverse     liquid assets sufficient to deal with
                                      reasonable adverse deviations in           deviations in actual cash flows            routine fluctuations in the level and
                                      actual cash flows compared to its          compared to its forecasts.                 timing of obligations, but not adverse
                                      forecasts.                                                                            deviations in actual cash flows
                                                                                                                            compared to its forecasts.
 3.40 4.2     30 Liquidity            The insurer has developed and              The insurer has developed and              The insurer has developed and             The insurer does not have a liquidity
                 contingency plan     maintains a contingency plan to deal       maintains a contingency plan to deal       maintains a contingency plan to deal      contingency plan.
                                      with unexpected cash outflows or           with unexpected cash outflows or           with unexpected cash outflows or
                                      conditions that would impair its           conditions that would impair its           conditions that would impair its
                                      ability to liquidate assets at a           ability to liquidate assets at a           ability to liquidate assets at a
                                      reasonable price. The plan does not        reasonable price. The plan does not        reasonable price. However, the plan
                                      rely solely on group resources.            rely solely on group resources.            relies solely on group resources.
                                      Commitments necessary to execute           Commitments necessary to execute
                                      the plan are in place.                     the plan are not in place.




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ALM Assessment                                                                                                          Name of Insurer                                                                                            Name of Assessor




 Sort Reg Item Element                Strong = 4                                Acceptable = 3                             Needs Improvement = 2                     Weak = 1 or 0                            Rating Explanation
 3.45 4.3 31 Longer-term              The insurer prepares analyses of          The insurer prepares analyses of           The insurer prepares analyses of          The insurer does not prepare analyses
               analyses               relevant risks and the likely             relevant risks and the likely              relevant risks and the likely             of relevant risks and the likely
                                      effectiveness of its ALM strategies       effectiveness of its ALM strategies        effectiveness of its ALM strategies       effectiveness of its ALM strategies
                                      under a range of alternative scenarios.   under a range of alternative scenarios.    under a range of alternative scenarios.   under a range of alternative scenarios
                                       Such analyses include forecasts of its    Such analyses include forecasts of its     Such analyses include forecasts of its   that include forecasts of its future
                                      future financial condition over a         future financial condition over a          future financial condition over a         financial condition over a period of
                                      period of several years. The              period of several years. The               period of several years. However, the     several years.
                                      sophistication and time horizon of        sophistication and time horizon of         sophistication or time horizon of such
                                      such forecasts, and the frequency with    such forecasts are commensurate with       forecasts, or the frequency with which
                                      which they are updated, are               the nature of the portfolios of assets     they are updated, not commensurate
                                      commensurate with the nature of the       and liabilities. However, the              with the nature of the portfolios of
                                      portfolios of assets and liabilities.     frequency with which the analyses are      assets and liabilities.
                                                                                updated is insufficient.

 3.50 4.3     32 Using the results    The board of directors and senior      The board of directors and senior             The board of directors and senior         The board of directors and senior
                 of longer-term       management of the insurer consider     management of the insurer consider            management of the insurer consider        management of the insurer do not use
                 analyses             how they would respond under the       how they would respond under the              how they would respond under the          the results of the analyses.
                                      various scenarios, focusing on those   various scenarios, not necessarily            various scenarios, not necessarily        Alternatively, they review the results
                                      with the most damaging impact on the   focusing on those with the most               focusing on those with the most           but do not consider how they would
                                      future financial condition. The        damaging impact on the future                 damaging impact on the future             respond under the various scenarios.
                                      business plans and ALM strategy are    financial condition. The business             financial condition. The business
                                      revised, as appropriate.               plans and ALM strategy are revised,           plans and ALM strategy are not
                                                                             as appropriate.                               revised.
 4.00 5.1     33 Organisation         The insurer is organised in a manner The insurer is organised in a manner            The insurer is organised in a manner      The insurer is not organised in a
                                      that provides a close and continuing   that provides a close and continuing          that should provide a close and           manner that would provide a close
                                      liaison between all areas that need to liaison between all areas that are            continuing liaison between all areas      and continuing liaison between all
                                      be involved to maintain effective      actually involved in ALM. The range           that are actually involved in ALM, but    areas that are or should be involved
                                      ALM. A wide range of organisational of organisational functions involved in          the organisation is not functioning       in ALM.
                                      functions are involved in ALM.         ALM is not as wide as it should be to         well. The range of organisational
                                                                             maximise the effectiveness of ALM.            functions involved in ALM is not as
                                                                                                                           wide as it should be to maximise the
                                                                                                                           effectiveness of ALM.

 4.05 5.1     34 Separation of        To the extent practicable, the            The monitoring of risk and processes       The monitoring of risk and processes      The monitoring of risk and processes
                 duties               monitoring of risk and processes has      has not been organisationally              has not been organisationally             has not been organisationally
                                      been organisationally separated from      separated from the functions               separated from the functions              separated from the functions
                                      the functions overseeing investments,     overseeing investments, pricing and        overseeing investments, pricing and       overseeing investments, pricing and
                                      pricing and management of in-force        management of in-force business.           management of in-force business.          management of in-force business. No
                                      business.                                 However, compensating controls,            Routine review of results by senior       mechanisms are in place to identify
                                                                                such as frequent and detailed review       management or a board committee is        problems.
                                                                                by a board committee or regular            relied on to identify problems.
                                                                                review by internal audit, are in place.

 4.10 5.1     35 Documentation of     The mandates, roles, and                  The mandates, roles, and                   The mandates, roles, and                  The mandates, roles, and
                 mandates, roles,     responsibilities of the positions and     responsibilities of the positions and      responsibilities of the positions and     responsibilities of the positions and
                 and                  committees involved in the ALM            committees involved in the ALM             committees involved in the ALM            committees involved in the ALM
                 responsibilities     program are clear, appropriate, and       program are appropriate and                program are appropriate, but might        program are poorly defined or
                                      documented in writing.                    documented in writing, but not as          not be as clearly defined as they         inappropriate. They might not be
                                                                                clearly defined or described as they       should be. They are not documented        documented in writing.
                                                                                should be.                                 in writing.




300c6c77-910a-4c7a-a534-7f31421c0107.xls                                                                            12/20/2010 7:48 PM                                                                                                   Page 6 of 7
ALM Assessment                                                                                                       Name of Insurer                                                                                          Name of Assessor




 Sort Reg Item Element                Strong = 4                                Acceptable = 3                           Needs Improvement = 2                     Weak = 1 or 0                         Rating Explanation
 4.15 5.2 36 Policies and             The insurer has developed and             The insurer has developed and            The insurer has developed and             The insurer has not developed or does
               procedures             maintains written policies and            maintains written policies and           maintains written policies and            not adequately maintain written
                                      procedures for its ALM program. The       procedures for its ALM program.          procedures for its ALM program.           policies and procedures for its ALM
                                      scope and level of detail of such         However, the scope or level of detail    However, the scope and level of detail    program.
                                      documentation is commensurate with        of such documentation is not             of such documentation are not
                                      the nature, size, and complexity of the   commensurate with the nature, size,      commensurate with the nature, size,
                                      insurer and the nature of its ALM         and complexity of the insurer and the    and complexity of the insurer and the
                                      program.                                  nature of its ALM program.               nature of its ALM program.
 4.20 5.3     37 Controls             The insurer has developed and             The insurer has developed and            The insurer has developed and             The insurer has not developed and
                                      implemented controls and reporting        implemented controls and reporting       implemented controls and reporting        implemented controls and reporting
                                      procedures for its ALM program that       procedures for its ALM program that      procedures for its ALM program that       procedures for its ALM program that
                                      are appropriate for its business and      are appropriate for its business and     are appropriate for its business and      are appropriate for its business and
                                      the risks to which it is exposed. It      the risks to which it is exposed. It     the risks to which it is exposed.         the risks to which it is exposed.
                                      monitors the observance of its            monitors the observance of its           However, it does not monitor the
                                      controls closely and reviews their        controls closely. The effectiveness of   observance of its controls closely.
                                      effectiveness regularly. Such             controls is reviewed occasionally by     The effectiveness of controls is
                                      monitoring includes periodic review       the internal audit function.             review rarely, if ever.
                                      by the internal audit function.
 4.25 5.3     38 Reports prepared     Reports are sufficiently detailed and    Reports are generally adequate to         Reports are inadequate in either detail   Reports are seriously deficient in both
                 for operational      frequent enough to enable operational    enable operational management to          or frequency, impairing the ability of    detail and frequency, making it
                 management           management to effectively manage the     manage the risks on a day-to-day          operational management to manage          impossible for operational
                                      risks on a day-to-day basis.             basis. However, the effectiveness of      the risks on a day-to-day basis.          management to manage the risks on a
                                                                               risk management could be improved if                                                day-to-day basis.
                                                                               the reports were more detailed or
                                                                               more frequent.
 4.30 5.3     39 Reports prepared     Reports contain sufficient information Reports contain sufficient information      Reports do not contain sufficient         Reports do not contain sufficient
                 for senior           to allow senior management to            to allow senior management to             information to allow senior               information to allow senior
                 management and       monitor adherence to the approved        monitor adherence to the approved         management to monitor adherence to        management to monitor adherence to
                 the board of         ALM policy on a regular basis, such ALM policy on a regular basis, such            the approved ALM policy on a              the approved ALM policy on a
                 directors            as monthly or quarterly. Reports are     as monthly or quarterly. Reports are      regular basis. Reports are prepared       regular basis. Reports prepared for
                                      also prepared for senior management also prepared for senior management            for senior management and the board       senior management and the board of
                                      and the board of directors that are      and the board of directors that provide   of directors that provide information     directors do not provide sufficient
                                      analytical in nature, allowing the users information about various aspects of      about various aspects of the ALM          information about the ALM program
                                      to draw independent conclusions          the ALM program and its results.          program and its results.                  to enable them to assess its results.
                                      about various aspects of the ALM
                                      program and about its effectiveness.

 4.35 5.3     40 Assessment of        The usefulness and timeliness of          The usefulness and timeliness of         The usefulness and timeliness of          The usefulness and timeliness of
                 reporting            reporting, and the accuracy and           reporting are considered in an ad hoc    reporting are considered in an ad hoc     reporting are considered in an ad hoc
                                      integrity of reporting systems are        manner. The accuracy and integrity of    manner. The accuracy and integrity of     manner. The accuracy and integrity of
                                      periodically verified in a formal         reporting systems are periodically       reporting systems are seldom verified     reporting systems are never verified in
                                      manner.                                   verified in a formal manner.             in a formal manner.                       a formal manner.




300c6c77-910a-4c7a-a534-7f31421c0107.xls                                                                           12/20/2010 7:48 PM                                                                                               Page 7 of 7

								
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