Tag: Milliman

Impact of COVID-19 on Defined Benefit Pension Plan Funding

Mary Pat Campbell

Link: https://www.theactuarymagazine.org/impact-of-covid-19-on-defined-benefit-pension-plan-funding/

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Excerpt:

Higher interest rates already have translated into higher discount rates for solvency and accounting valuations, which means good news (lower liabilities) for DB pension plans. The sensitivity of a pension plan’s liabilities to the discount rate used to determine their value depends on the demographics of the plan members, the type of valuation and level of discount rates being used. Generally, the “duration” for most pension plan liabilities (defined here as the percentage decrease in liabilities for a 1% increase in discount rates) will range from 10 to 25.

In the United States, the average accounting funded ratio increased from 94.6% in July 2021 to 104.5% in July 2022, according to the Milliman 100 Pension Funding Index, despite significant decreases in plan assets during that time. This is because the average accounting discount rate (typically based on long-term, high-quality bond yields) increased from 2.59% to 4.25% during that same period, driving down accounting liabilities at a faster pace than asset losses. Figure 1 demonstrates this effect in more detail.

Author(s): John Melinte

Publication Date: November 2022

Publication Site: The Actuary at SOA

Milliman analysis: Corporate pension funding ratio surges to 112.8% in October thanks to rising discount rates

Mary Pat Campbell

Link: https://www.prnewswire.com/news-releases/milliman-analysis-corporate-pension-funding-ratio-surges-to-112-8-in-october-thanks-to-rising-discount-rates-301669154.html

Excerpt:

Milliman, Inc., a premier global consulting and actuarial firm, today released the results of its latest Milliman 100 Pension Funding Index (PFI), which analyzes the 100 largest U.S. corporate pension plans.

During October, the Milliman 100 PFI funded ratio rose from 108.8% on September 30 to 112.8% on October 31, reaching a new high for the year. The change was driven by a 35-basis-point hike in the monthly discount rate. The PFI projected benefit obligation decreased to $1.266 trillion as the discount rate rose from 5.36% in September to 5.71% for October—the highest rate since March 2010. This increase helped to offset October’s flat investment returns of 0.21%, which lowered the Milliman 100 PFI asset value by $4 billion.

Publication Date: 4 Nov 2022

Publication Site: PRNEWSWIRE

2021 Milliman Variable Annuity Mortality Study

Mary Pat Campbell

Link: https://www.milliman.com/en/insight/2021-Milliman-Variable-Annuity-Mortality-Study

Excerpt:

Milliman Variable Annuity Mortality Study shows mortality increases of 11% as a result of COVID-19 pandemic

Life insurers and annuity writers are now beginning to understand the impact of the COVID-19 pandemic on their lines of business, as mortality data for the year 2020 is reported and analyzed. While the pandemic has affected different carriers in different ways, future mortality rates are a key assumption for annuity writers.

With Milliman’s acquisition of Ruark Consulting in December 2021, the industry’s leading variable annuity mortality study has been rebranded as the Milliman Variable Annuity Mortality Study. The study is based on data from 2008 through 2020, totaling $674 billion in account value as of the end of the study period, with over 1 million deaths across 19 companies.

Author(s): Timothy Paris

Publication Date: 14 Mar 2022

Publication Site: Milliman

Bermuda: Living life (insurance) in paradise

Mary Pat Campbell

Link: https://www.milliman.com/en/insight/bermuda-living-life-insurance-in-paradise/?utm_source=linkedin&utm_medium=social-global-company-page&utm_campaign=life

PDF: https://www.milliman.com/-/media/milliman/pdfs/2022-articles/3-28-22-bermuda.ashx

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Description:

We review the history of life insurance in Bermuda, reflect on how we have gotten to where we are today, and look forward to what may be ahead. We present a hypothetical—yet realistic—case study to illustrate some of the factors that can lead to a strategic decision do business Bermuda. From an embedded-value perspective, we highlight potentially considerable benefits from a move from a U.S. statutory basis to a Bermudian economic balance sheet.

Author(s): Tony Dardis, William C. Hines, and Su Meng Lee

Publication Date: 28 March 2022

Publication Site: Milliman

Report: In a year marked by economic hardship, public pension funding is up

Mary Pat Campbell

Link:https://www.americancityandcounty.com/2021/10/28/report-in-a-year-marked-by-economic-hardship-public-pension-funding-is-up/

Excerpt:

In a year filled with gloomy news of economic hardships and the ongoing pandemic, there’s a bright spot: the funded ratio of the 100 largest U.S. public pensions is up by more than 15 percent this year, according to Milliman’s annual analysis. 

“Surging market returns have propelled pension assets far beyond previous levels, driving the estimated funding deficit below $1 trillion for the first time since 2012,” the report says. “We estimate that nearly half of the plans in the study stood above 90 percent funded as of June 30.” 

Only 13 public pension plans were above 90 percent funded based on Milliman’s 2020 analysis. 

Author(s): Andy Castillo

Publication Date: 28 Oct 2021

Publication Site: American City and County

Ambac files motion to compel documents from actuary – Puerto Rico pensions

Mary Pat Campbell

Document Link: https://drive.google.com/file/d/1-lIsmyzEIiDvYXnYJtWw5kaCI25euLFk/view

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Date Accessed: 21 April 2021

Shared by: Cate Long

Publication Site: Twitter and Google Drive

Milliman analysis: Public pensions’ funded ratio hits new high at 79.0% in Q1 2021

Mary Pat Campbell

Link: https://www.prnewswire.com/news-releases/milliman-analysis-public-pensions-funded-ratio-hits-new-high-at-79-0-in-q1-2021–301271688.html

Excerpt:

In 2021, public pensions have continued their strong recovery from a year prior, with the funded status of the Milliman 100 plans increasing to 79.0% as of March 31, up from 78.6% at the end of December 2020 and 66.0% in Q1 2020. The Q1 2021 funded ratio is the highest recorded in the history of Milliman’s Public Pension Funding Study.

“While 2021 has proven to be a strong year for public pensions so far, there are still lingering questions around the impact of the COVID-19 pandemic on these plans,” said Becky Sielman, author of Milliman’s Public Pension Funding Study. “The past year has seen workforce volatility and strain on state budgets which could put downward pressure on funding in the future.”

Author(s): Milliman

Publication Date: 19 April 2021

Publication Site: PRNewswire

New Milliman report highlights mental health care utilization during COVID-19 pandemic

Mary Pat Campbell

Link: https://wellbeingtrust.org/news/new-milliman-report-highlights-mental-health-care-utilization-during-covid-19-pandemic/

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Like utilization for non-Covid-related physical health care, utilization of mental health services dropped significantly when COVID-19 took hold in the United States in early 2020. However, in evaluating those dips, the use of care involving mental health conditions fell less than other kinds of care.

People with a mental health diagnosis were less willing to forego care during COVID-19’s peak. When restrictions began to be lifted in June 2020, visits to primary care offices by those with a mental health diagnosis actually rose above 2019 levels.

With the exception of Medicare beneficiaries, when remote health care utilization was factored into individuals’ overall behavioral health care utilization numbers, there were primarily year-over-year increases across all insured populations. Mental health care utilization increased among the Medicaid population between 2019 and 2020, and only decreased by 1% in March and May among the commercially insured population.

Publication Date: 16 March 2021

Publication Site: Well Being Trust

COVID-19 Impact on Long-Term Care Insurance 2020 Survey

Mary Pat Campbell

Link: https://www.soa.org/resources/experience-studies/2021/covid-impact-ltc-2020-survey/

Full study: https://www.soa.org/globalassets/assets/files/resources/experience-studies/2021/covid-impact-ltc-2020-survey.pdf

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Overall, the survey results show that COVID-19 has had an impact on emerging LTC insurance experience through
higher mortality (for both active and disabled lives) and lower claim incidence. Results on voluntary lapse rates were
mixed; however, premium grace period extensions due to COVID-19 may have contributed to differences in
reporting. The survey results also indicated that, in many cases, the impact of COVID-19 has not yet been studied or
there is not yet data available. This was especially true in relation to studying COVID-19’s impact across various
characteristics (gender, attained age, marital status, situs).


For questions studying the impact of COVID-19 on specific assumptions, the effect was measured on a multiplicative
basis compared to the expectation without COVID-19, except for voluntary lapse, which was measured on an
additive basis. See examples in the full survey questions in Appendix A for additional detail.

Authors: Mike Bergerson, FSA, MAAA, Principal and Consulting Actuary
Andrew Dalton, FSA, MAAA, Principal and Consulting Actuary
Robert Eaton, FSA, MAAA, Principal and Consulting Actuary
James Stoltzfus, FSA, MAAA, Principal and Consulting Actuary

Milliman

Publication Date: March 2021

Publication Site: Society of Actuaries

Milliman analysis: Corporate pension funded ratio climbs to 92.9% in February

Mary Pat Campbell

Link: https://www.prnewswire.com/news-releases/milliman-analysis-corporate-pension-funded-ratio-climbs-to-92-9-in-february-301242549.html

Excerpt:

Milliman, Inc., a premier global consulting and actuarial firm, today released the latest results of its latest Pension Funding Index (PFI), which analyzes the 100 largest U.S. corporate pension plans.

In February, corporate pension funding improved by $67 billion thanks to a 26-basis-point increase in the monthly discount rate, from January’s 2.62% to 2.88% as of February 28. As a result, the funded status deficit dropped to $133 billion at month’s end. Meanwhile, the market value of assets dropped by $2 billion for the month, the result of a meager 0.13% investment gain. Overall the funded ratio for the Milliman PFI plans climbed from 89.7% at the end of January to 92.9% as of February 28, the fifth straight month of improved funding for these plans.

Author(s): Milliman

Publication Date: 8 March 2021

Publication Site: PRNewswire

Multiemployer Pensions Reach Highest Funding Levels in 13 Years

Mary Pat Campbell

Link: https://www.ai-cio.com/news/multiemployer-pensions-reach-highest-funding-levels-13-years/?

Excerpt:

Robust investment returns helped boost the aggregate funded percentage of all US multiemployer pension plans to 88% at the end of 2020, from 85% a year earlier—the highest since before the global financial crisis at the end of 2007—according to consulting and actuarial firm Milliman.  

The strong performance came despite a turbulent year of market volatility due to the impact of the COVID-19 pandemic. The volatility caused those same plans’ funded ratio to plunge to 72% during the first quarter of the year, which was the largest quarterly drop in funded percentage since 2007. That was followed by a rebound to 82% in the second quarter, which was the largest quarterly increase in funded percentage since 2007.

Author(s): Michael Katz

Publication Date: 22 February 2021

Publication Site: ai-CIO

US Corporate Pension Funded Ratio Climbs to 89.8% in January

Mary Pat Campbell

Link: https://www.ai-cio.com/news/us-corporate-pension-funded-ratio-climbs-89-8-january/

Excerpt:

The funded ratio of the 100 largest corporate defined benefit (DB) pension plans improved to 89.8% at the end of January from 88.1% at the end of December as their aggregate deficit fell below $200 billion for the first time in more than a year, according to consulting firm Milliman.

With the help of a 16 basis point (bp) increase in the monthly discount rate to 2.62% from 2.46%, the plans’ funding improved by $39 billion in January as their aggregate deficit declined to $196 billion from $235 billion due to liability gains incurred during the month.

Author(s): Michael Katz

Publication Date: 17 February 2021

Publication Site: ai-CIO