scholarly journals What Motivates Insurers to Use Derivatives: Evidence from the United Kingdom Life Insurance Industry

2011 ◽  
Vol 36 (2) ◽  
pp. 186-196 ◽  
Author(s):  
Yung-Ming Shiu
Keyword(s):  
United Kingdom ◽  
Life Insurance ◽  
Insurance Industry ◽  
The United Kingdom ◽  
Life Insurance Industry

The Effects of Solvency Margins on U.K. Life Companies.

1987 ◽  
Vol 30 ◽  
pp. 67-96
Author(s):  
W. P. May ◽  
K. J. Newbury
Keyword(s):  
United Kingdom ◽  
Life Insurance ◽  
Insurance Industry ◽  
Point Of View ◽  
Financial Position ◽  
Life Insurance Industry ◽  
Full Effect ◽  
Financial Consequences ◽  
Effective Life

The requirement for a United Kingdom life office to hold solvency margins in addition to its normal actuarial reserves took full effect on 15 March 1984. At the time of writing, solvency margins for U.K. life offices have therefore had an effective life of under two years. Before the introduction of the regulations, many comments were made within the life insurance industry about the effects which the introduction of the life solvency margins would have on the financial position of U.K. life offices. This therefore seems an appropriate time to reflect on the theoretical financial consequences of solvency margins from the point of view of a U.K. life company, and comment on the practical effects which have been observed to date.

Empirical Evidence on the Use of Dynamic Solvency Testing and Financial Condition Reporting in the United Kingdom Life Insurance Industry

2006 ◽  
Vol 1 (2) ◽  
pp. 359-392 ◽  
Author(s):  
Y.-M. Shiu ◽  
P. Moles ◽  
A. T. Adams ◽  
C.-C. Chan
Keyword(s):  
United Kingdom ◽  
Insurance Industry ◽  
Non Profit ◽  
Financial Condition ◽  
Guidance Note ◽  
The United Kingdom ◽  
Life Insurance Industry ◽  
Significant Difference ◽  
Scenario Testing ◽  
Insight Into

ABSTRACTTo gain insight into the use of Dynamic Solvency Testing (DST) and Financial Condition Reporting (FCR), a questionnaire was distributed to Appointed Actuaries in United Kingdom life offices. The response rate of the main survey was 76%. An independent-samples t-test for non-respondent bias was conducted and the results suggest that the respondent sample is representative of the survey population. Results from the 62 firms responding revealed: (1) Scenario testing was the most commonly used DST techniques. (2) Most life offices regularly run less than ten scenarios in scenario testing. (3) Most life offices reported using a five-year forecast period in DST. (4) The two most commonly seen difficulties are: difficulties in communicating complex issues to non-specialists, and how to present extremely adverse scenarios without causing undue concern. (5) Nearly all life offices use FCR. (6) Guidance Note 2 is generally considered acceptable. (7) Compared with the results reported by previous studies, the use of DST techniques is now more common in life offices. (8) There is a significant difference in DST/FCR practices between with-profits and non-profit offices.

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