MetLife’s Earnings Surge, but Covid-19 Limits Insurer’s Latest Results

Link: https://www.wsj.com/articles/metlifes-earnings-surge-but-covid-19-limits-insurers-latest-results-11643844316

Excerpt:

High levels of Covid-19 deaths hurt fourth-quarter results in MetLife Inc.’s business of providing employer-sponsored life insurance as the Delta variant persisted in the U.S., but the outsize payouts were more than offset by unusually strong investment gains.

The New York company’s net income soared to $1.18 billion, compared with a year-earlier period that had been hurt by mark-to-market losses on financial hedges that aim to protect against falling interest rates. MetLife’s adjusted earnings, which analysts track as a measure of recurring profitability, were flat at $1.84 billion.

Another household-name insurer, Allstate Corp., reported a 70% drop in net income to $790 million, and a 50% decline in adjusted net income to $796 million, primarily driven by worsened car-insurance underwriting income. Accident volume increased on more-crowded roads, and inflation pushed repair costs higher.

Catastrophe costs were also higher. U.S. property insurers ended the year with two high-profile catastrophes: deadly tornadoes in and around Kentucky, and devastating wildfire between Denver and Boulder, Colo.

Author(s): Leslie Scism

Publication Date: 2 Feb 2022

Publication Site: WSJ

2021 Academy Legislative/Regulatory Review

Link: https://www.actuary.org/sites/default/files/members/alerts/pdf/2022/2022-CP-1.pdf

Excerpt:

The American Academy of Actuaries presents this summary of select significant regulatory and
legislative developments in 2021 at the state, federal, and international levels of interest to the U.S.
actuarial profession as a service to its members.

Introduction

The Academy focused on key policy debates in 2021 regarding pensions and retirement, health, life,
and property and casualty insurance, and risk management and financial reporting.


Responding to the COVID-19 pandemic, addressing ever-changing cyber risk concerns, and analyzing
the implications and actuarial impacts of data science modeling continued to be a focus in 2021.


Practice councils monitored and responded to numerous legislative developments at the state, federal,
and international level. The Academy also increased its focus on the varied impacts of climate risk and
public policy initiatives related to racial equity and unfair discrimination in 2021.


The Academy continues to track the progress of legislative and regulatory developments on actuarially
relevant issues that have carried over into the 2022 calendar year.

Publication Date: 15 Feb 2022

Publication Site: American Academy of Actuaries

“What If I Can’t Insure My Home At All?”

Link:https://www.dailyposter.com/what-if-i-cant-insure-my-home-at-all/

Excerpt:

Insurance giants Chubb, Liberty Mutual, and AIG are three of the biggest insurers of fossil fuel infrastructure around the world. But the companies have just announced plans to scale back their homeowner coverage in California, where they insist future climate-related losses will likely prevent them from turning a profit.

The coverage withdrawals may soon ignite a big money battle in the state’s legislature, pitting insurance giants against lawmakers trying to preserve coverage for their constituents. Meanwhile, climate campaigners are decrying what they say is a fundamental hypocrisy.

…..

Last year, Chubb’s chairman and CEO Evan Greenberg said the company was reducing its coverage in parts of the state that were “both highly exposed, and even moderately exposed, to wildfire” because it was unable to obtain an “adequate price for the risk, and not by a small amount” due to both the costs of wildfires and California’s regulatory climate.

…..

A main solution proposed by industry is that they be allowed to use “catastrophic modeling,” a method where rates are set based on predictions of future losses, rather than recorded past losses, as is currently the case. All other states allow the use of this technique in at least some cases.

Author(s): Sam Mellins

Publication Date: 7 Feb 2022

Publication Site: The Daily Poster

2022 Predictions

Link: https://www.linkedin.com/pulse/2022-predictions-max-rudolph/

Graphic:

Excerpt:

Regional conflicts are heating up around the world. Resource needs will accelerate the trend. Fresh water in the Himalayas provide multiple countries who have nuclear arsenals. Oil and rare earth metals could also trigger a war. Climatic events are happening more often, so the cost takes money away from solutions while making the goals seem more obvious.

….

Resource depletion has no recommended debit treatment from accountants, but attribution analysis is going to do the work after the fact and charge companies for their past practices through the court system. I assume this is how the asbestos risk played out but I will need to learn more about similar historical events as these events play out. How should this enter your thought process as an investor? In 2021 I wrote 4 papers about climate; Climate System, Integrated Assessment Models, Impact of Climate Change on Investors and Municipalities and Climate Change. They are part of the SOA’s Environmental Risk Series. The impact of climate on investors will continue to evolve for many years. One topic of interest to me is how TCFD (disclosures) will play out – we could see “bad” investments like oil companies, gun makers and cigarette companies become privately owned. This would make it harder to apply peer pressure so is an important reminder to be careful what you wish for!

Author(s): Max Rudolph

Publication Date: 16 Jan 2022

Publication Site: LinkedIn

Jerry Theodorou on Natural Disasters and Insurance

Link:https://www.c-span.org/video/?514314-3/washington-journal-jerry-theodorou-discusses-natural-disasters-insurance

Excerpt: [transcript from closed captioning]

Jerry Theodorou
IT IS HARD TO CALCULATE. THE INSURANCE INDUSTRY WAS FACED WITH MASSIVE FLOOD LOSSES BUT FOUND THAT IT DID NOT HAVE THE DATA TO PRICE IT ACCURATELY. IT STARTED REDUCING AND EXCLUDING FLOOD FROM STANDARD INSURANCE POLICIES AND THE GOVERNMENT STEPPED IN TO CREATE THE PROGRAM. TO PROVIDE SOME LEVEL OF FLOOD INSURANCE. THERE IS AN INHERENT TENSION IN THE PROGRAM BECAUSE IT HAS TWO GOALS IN CONTENTION WITH EACH OTHER. THE GOAL TO PROVIDE AFFORDABLE FLOOD INSURANCE AND SOME DEGREE OF FISCAL SOUNDNESS. THEY ARE PAYING ABOUT $400 BILLION IN INTEREST, WHICH IS A BURDEN, SO IF WE FOCUS STRICTLY ON AFFORDABILITY, YOU WILL HAVE UNDERPRICED INSURANCE, NOT PRICED ACCORDING TO THE ACTUAL VOLUME. THIS IS WHAT IS HAPPENING NOW WITH LARGELY IMPACT — OVERPRICED INSURANCE. FOCUSING ON FISCAL SOUNDNESS, YOU WILL HAVE THOSE EXPOSED. IT IS A LITTLE BIT OF A BALANCE. DO YOU WANT FISCAL SOUNDNESS? PROBABLY A LITTLE BIT OF BOTH, WHICH IS MY NEXT MONTH, OCTOBER 1, THE NEW BEATING WILL BE INTRODUCED TO MAKE IT MAKE THE PRICING AND THE COST OF FLOOD INSURANCE MORE APPROPRIATE FOR THE LEVEL OF RISK. IT IS EITHER OR. IF YOU LIVE IN A FLOOD ZONE, YOU PAY HIGHER PREMIUMS. IT IS NOT BLACK-AND-WHITE BECAUSE THERE IS A SPECTRUM FOR THE DEGREE OF RISK. IT WILL INTRODUCE MORE VARIABLES SO THAT IT IS MORE APPROPRIATELY CORRELATED WITH THE LEVEL OF RISK.

Author(s): Jerry Theodorou, John McArdle

Publication Date: 5 Sept 2021

Publication Site: C-SPAN, Washington Journal

Skip the fireworks this record-dry 4th of July, over 150 wildfire scientists urge the US West

Link: https://theconversation.com/skip-the-fireworks-this-record-dry-4th-of-july-over-150-wildfire-scientists-urge-the-us-west-163561

Graphic:

Excerpt:

For decades, one of the most striking and predictable patterns of human behavior in the western U.S. has been people accidentally starting fires on the Fourth of July. From 1992 to 2015, more than 7,000 wildfires started in the U.S. on July 4 – the most wildfires ignited on any day during the year. And most of these are near homes.

Author(s): Philip Higuera, Alexander L. Metcalf, Dave McWethy, Jennifer Balch

Publication Date: 1 July 2021

Publication Site: The Conversation

St. Francis Dam Disaster – Frank Black and the Catholics

Description:

It’s not just a song, it’s a history lesson!

St. Francis Dam Disaster by Frank Black and the Catholics off of the album Dog in the Sand (2001 Cooking Vinyl)

Many of the pictures were culled from https://scvhistory.com/scvhistory/stfrancis.htm

They have a lot of info on the St. Francis Dam disaster and it’s worth checking out if you want to see more.

Image:

Author(s): Skippy .Bob

Publication Date: 1 December 2013

Publication Site: YouTube