Due Care Bulletins
Life insurance due care requires an understanding of the factors that impact policy performance and drive product selection. M Financial Group continues to lead the industry in life insurance due care and client advocacy, providing valuable insight and analysis that delivers significant value to clients.
February, 2012
Assessing the Impact of Low Interest Rates on Life Insurance Products
Generally speaking, interest rates have been on the decline for more than 30 years. More recently, events of the financial crisis, which began in 2008, have contributed to this decline.
- The Federal Reserve responded to the crisis by suppressing interest rates in order to spur economic growth; and
- Investor demand for the relative safety of fixed income investments like U.S. Treasury and high-quality corporate bonds has increased, driving prices up and yields down.
Interest rates have a direct impact on life insurers and the products that they issue and manage. Companies generally make profits from the spread between what they earn on their general account portfolios and what they credit as interest on insurance policies. Policyowners are impacted as low interest rates result in lower investment returns credited to policies over time.
October, 2010
Private placement insurance products occupy a unique place in the spectrum of financial products. While having the same tax benefits, private placement insurance products offer policy structures and investment alternatives not found in traditional retail variable universal life (VUL) and variable annuity (VA) products. Because they can only be offered to individuals who are qualified purchasers and accredited investors, private placement variable universal life (PPVUL) and variable annuities (PPVA) offer high net worth clients access to both investment alternatives and customized product designs that are difficult or impossible to obtain in traditional retail or registered products. They are optimal in their use as a tool to address a multitude of financial, income, and estate tax planning objectives.
June, 2010
S&P Issues Midyear 2010 Outlook for U.S. Life Insurance Sector
Standard & Poor's said that if economic conditions continue to improve, they might consider revising the outlook for the U.S. Life Insurance sector to stable by the end of 2010. S&P revised its outlook on for the U.S. Life Insurance sector to negative in October 2008, predominately as a result of the steep economic downturn and its effect on life insurers' earnings, investments, and capital. The ratings agency stated that they are maintaining their negative outlook based on the expectation that downgrades will continue through the second half of 2010, even as the overall industry should continue to improve its capital adequacy and earnings.
March, 2010
Analysis of Life & Health Insurer Impairments
Life insurers have fared well relative to banks in the recent economic meltdown and recession. Further, life insurers have fared well even when compared to historical average failure rates. The purpose of this bulletin is to look at the relatively low historical failure rates for life insurers, examine the most common risk factors that contribute to life insurer impairments, and discuss safeguards that have evolved over the last 20 years to minimize the impact of those risk factors. The bulletin also reiterates the effectiveness of policyholder protections, even when a carrier experiences financial challenges.
February, 2010
Competitive Update for Repriced Nationwide Marathon Performance VUL - Protection
Nationwide's Marathon Performance VUL - Protection (MPVULP), an M proprietary product in Nationwide's Marathon Series, was recently repriced with a performance improvement. Consistent with M Financial Group's inforce management principles, this pricing improvement automatically applies to inforce business as well as new sales. As a result of the repricing, MPVULP provides more competitive premium solves and strong cash accumulation.
December, 2009
An Overview of Whole Life Versus Universal Life
The debate regarding the benefits of Whole Life (WL) vs. Universal Life (UL) began when UL was introduced in the early 1980s. This debate - waged by loyal advocates for each respective product - has continued ever since. This M Due Care Bulletin will compare these two different life insurance products, including illustrated performance comparisons.
November, 2009
Assessing the Impact of the Decline in the Commercial Real Estate Market
Concerns about the stability of life insurers and other financial service companies are growing as economists predict that the commercial real estate and mortgage market will be the next domino to fall in the current recession. Life insurers allocate approximately 15% of their assets to commercial mortgage-related investments. Real estate values have fallen dramatically over the past two years and in light of tighter credit markets, forecasters predict a dire scenario for commercial mortgages. Default levels on commercial mortgages have risen to their highest levels in more than 15 years and are expected to continue to rise through 2010.
April, 2009
Choosing Life Insurance Products in Today's Volatile Economic Environment
Purchasing life insurance in the high net worth marketplace is a complex and at times, difficult process. From product selection to product performance, there are many factors to consider when buying life insurance. The ongoing volatility in the financial markets can create additional challenges.