Crisis

  • We've all heard a lot about the junk bond crisis.
    • Is the next crisis going to be junk illustrations?

--  Judy Faucett

1991 - SOA - Illustrations, Society of Actuaries - 20p

  • 2009 - AP - Reflections on Northern Rock: The Bank Run that Heralded the Global Financial Crisis, Hyun Song Shin - 34p
  • 2014 - SOA - A Qualitative History of Previous Challenging Environments for the Life Insurance Industry, By Evan Borisenko, Society of Actuaries - 4p
    • These periods include :
      • the Great Depression,
      • the Great Inflation of the 1970s, and the
      • influenza pandemic of 1918.
      • These past events should be studied to learn the effect of economic conditions on life insurer solvency, as well as to identify the actions that helped firms navigate these conditions
    • Great Depression ... certain pressures on the industry during this time are worth noting.
    • In the late 1970s and early 1980s, a crisis with a different source tested the life insurance industry.
    • [Bonk: No mention of 2008, 1990s]
  • Insurance and Systemic Risk) - [PDF-181p,
    • (p42) - Bill Posey (R-FL) - It is clear that if your testimony today was true, very few of you need any more useless bureaucratic regulation.
      • And who would have ever thought that, after the S&L crisis, so relatively shortly after the S&L crisis, with all the additional regulation that was put in place following the crisis, that we would again find ourselves in this hole of a financial crisis.
      • I mean, if regulation would have solved the problem, we wouldn’t be here today,  because brighter minds, creative lawmakers threw a bunch of regulation into the S&L crisis, and obviously it didn’t do anything.
      • And why we would think that we could be successful in trying to advance, out-think a creative risk-taker, kind of defies logic.
      • I think the answer is to hold people who harm people accountable.
      • You know, we pretty much, I think, agree that the cause of the crisis that we’re in now has been caused by greed. 
    • (p42) - And, I mean, if regulation would take care of it, the SEC’s 1,100 attorneys would have prosecuted Bernard Madoff 10 years ago when his scheme was exposed to them, and they refused to take any action.
  • While the dramatic changes envisaged in the scenarios presented to us might generate immediate and drastic response by a firm in another industry, in the life insurance industry the response -- if any -- comes at a more measured pace.
  • The crisis reaches its peak before the industry begins to respond effectively to the problem.
  • By the time response is forthcoming, the crisis is past and another issue begins to pick up steam to take its place.
  • The financial momentum of the business enables companies to sail by the crisis peak, if I may mix a metaphor, and on into other troubled waters.
  • The slower, more deliberate reaction of the life industry enables the necessary changes to be made over longer periods of time, thereby gradually improving performance.
  • So far, this general avenue of conduct has been successful.
  • Will it continue to be so in the 1980's?

-- John R. Gardner

1980 - SOA - The Future of Permanent Life Insurance, Society of Actuaries - 28p