Life Insurance Securitization - The Actuaries' Club of the Southwest
Life Insurance Securitization - The Actuaries' Club of the Southwest
Life Insurance Securitization - The Actuaries' Club of the Southwest
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Developing a securitization structure forAXXX reserves entails unique considerations• AXXX reserves are not as well defined as XXX reserves• Could depend on product features and fund performance• May be difficult to define <strong>the</strong> “Economic Reserve” for <strong>the</strong> ULsecondary guarantee and <strong>the</strong> amount <strong>of</strong> reserve redundancy to besecuritized• While <strong>the</strong> main risk to investors in an XXX securitization is adversemortality experience, an AXXX securitization would be subject toadditional risks:• Investment• Persistency• Premium patterns• Crediting strategy• AXXX reserves for a block <strong>of</strong> business could run <strong>of</strong>f more slowlythan XXX reserves, and remain on <strong>the</strong> books for a very long time©Towers PerrinContinued…19
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