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ARCHIVE | Criteria | Insurance | Life: Insurance Capital Optimization: Reducing Risk Through The Creation Of A Closed Block Oct 01
Standard & Poors, Oct 2001
Abstract
[Editor's Note: A previous version of this article did not include the capital charge formula for closed block performance. The correct table, RCB risk charges 1, is below.] One of the greatest challenges facing the U.S. life insurance industry comes in the wake of the growing movement toward demutualization. As more firms demutualize (see Charts 1, 2, and 3), shareholder pressures place increased focus on earnings performance, as measured by return on equity. This inevitably will force financial management at insurance companies to reevaluate the amount of capital deployed in their business, especially in light of the historically low return on capital that these firms have produced. As these insurers attempt to balance financial soundness with capital management, they continually...
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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