Asset Liability Management (ALM) and Risk Management in Insurance Companies

$279.00/learner

Insurance companies employ a variety of strategies to manage the myriad of risks they face. For example, some strategies used to manage net investment spread may include strategic asset allocation and the use of derivatives within an overall internal risk management framework. Depending on the goals of the program, the interest rate sensitivities of the assets may be matched with the interest rate sensitivities of the liabilities. Or they may mismatch these sensitivities creating what is known as a gap, in an attempt to earn a higher net investment spread. Further, customer behavior and the market environment may change impacting sensitivities. Companies’ business mix, e.g., different life insurance and annuity offerings, will also play a role in managing net investment spread. Liquidity is managed by analyzing cash flows to ensure there is cash on hand to meet ongoing obligations. This can be achieved by setting internal benchmarks and monitoring these flows on an ongoing basis. Risk-based capital will be discussed as capital plays a vital role in ALM. Asset liability management is often interwoven with risk management. Risk management may include additional metrics, such as value at risk or stress testing scenarios, and may simply be part of the ALM process.

  • Date: Tuesday, November 8th, 2022
  • Recommended CPE Credits: 2.4
  • Duration: 2 Hours
  • Time: 1:00-3:00 p.m. ET
Category:

Description

Insurance companies employ a variety of strategies to manage the myriad of risks they face. For example, some strategies used to manage net investment spread may include strategic asset allocation and the use of derivatives within an overall internal risk management framework. Depending on the goals of the program, the interest rate sensitivities of the assets may be matched with the interest rate sensitivities of the liabilities. Or they may mismatch these sensitivities creating what is known as a gap, in an attempt to earn a higher net investment spread. Further, customer behavior and the market environment may change impacting sensitivities. Companies’ business mix, e.g., different life insurance and annuity offerings, will also play a role in managing net investment spread. Liquidity is managed by analyzing cash flows to ensure there is cash on hand to meet ongoing obligations. This can be achieved by setting internal benchmarks and monitoring these flows on an ongoing basis. Risk-based capital will be discussed as capital plays a vital role in ALM. Asset liability management is often interwoven with risk management. Risk management may include additional metrics, such as value at risk or stress testing scenarios, and may simply be part of the ALM process.

Course Objectives

By the end of the course, participants will be able to:

  • Define and explain the role of asset and liability management within the context of life insurance and property and casualty insurance companies
  • Recognize that risk management is a process and a culture
  • Identify the myriad of risks including interest rate risk, credit, liquidity, equity, foreign exchange and capital
  • Explain and analyze ALM strategies to manage these risks with a specific focus on interest rate risks and the use of derivatives

Prerequisites: A good knowledge of capital market is suggested

Program Level: Intermediate

Target Audience: Relevant areas/departments that will benefit from this training will be Asset Liability Management, Risk Management, Treasury, Investment Management, Operations, Accounting, Finance, Legal and Regulatory

Advance Preparation: None

Computers and Financial Calculators: N/A

Recommended CPE Credits: 2.4

Duration: 2 Hours

Price: $279/learner