There are a lot of uncertainties inherent in the valuation and capital modelling of Periodical Payment Order (“PPO”) liabilities. Not only is there no perfect hedge for the inflation indices applied to them, there is also very limited data upon which to base mortality models. While much has been written on the challenges presented by… Continue reading>
There is a new paradigm evolving in energy requirements which will has potentially huge structural implications across several industries. This is illustrated in the graph below. We think insurance will be affected in several ways, here are just a few possible consequences: Acceleration in US economic recovery and resulting consequences of interest rate normalisation on… Continue reading>
We thought these two charts prepared using recent data from the UK Office for National Statistics tell an interesting tale: unstable and possibly declining inflation over the last few years coupled with a decline in real average weekly earnings over the period since the financial crisis broke. How best to capture this in pricing, reserving… Continue reading>