Resources for ALM Practitioners: What Questions Should You Ask?
May 2025
Authors
Max J. Rudolph, FSA, CFA, CERA, MAAA
Rudolph Financial Consulting, LLC
Mark Evans, FSA
Applied Stochastics, Inc.
Executive Summary
Following a brief introduction, Section 1 of the paper shares some basic ALM practices, sources for further reading, and some recent developments in the ALM space. Links have been provided where the referenced articles are publicly available, and readers can dive further into the material as desired. Section 2 introduces the ALM survey, splitting each major survey component into a brief review of the questions asked, survey results by product when applicable, and current considerations. It is important to note that this research paper is intended as a collection of resources for ALM practitioners. The paper is in no way intended to represent official recommendations or standards. Practitioners with different levels of expertise can use the survey questions as an additional resource to consider where an insurer may be at risk going forward or identify opportunities.
The major components of the survey include:
- Demographics
- Governance/objectives
- Product/asset detail
- Metrics
- IFRS 17
- Valuation metrics/discount rates
- Scenario testing
- Hedging
- Software
For products backed by general account assets, respondents reported a wide range of practices. Consensus included situating the ALM team in a centralized unit, calculating metrics such as duration and reporting them at least quarterly. Real world scenarios were used for the surveyed products, and most respondents felt comfortable with the interest rate generators they currently use.
Looking into the future for ALM outside of the survey, there may be additional scrutiny of an insurer’s ALM program following the public challenges faced by some regional banks in 2023. Regulators and other stakeholders may ask for additional information in the near future to better ascertain the industry risk profile. Proactive life insurers may find it beneficial to carefully review the ALM programs they have in place and ensure they can use them, as applicable, to manage which risks they have knowingly accepted.
What should someone new to ALM take from this paper? In addition to the list of references and survey questions, readers can gain knowledge about how an ALM process cycle can be developed. Readers are encouraged to revisit the paper from time to time to further develop their understanding and knowledge as they work with ALM and encounter new product features for the first time. It is helpful for practitioners to pose new ideas and explain how these ideas would benefit the ALM process. Likewise, understanding how companies are reporting their ALM process and results will benefit regulators and other stakeholders.
Materials
Resources for ALM Practitioners
Acknowledgments
The researchers’ deepest gratitude goes to those without whose efforts this project could not have come to fruition: the Project Oversight Group and others for their diligent work overseeing questionnaire development, analyzing and discussing respondent answers, and reviewing and editing this report for accuracy and relevance.
Project Oversight Group members:
Robert Reitano, FSA, MAAA, CERA, Chair
David Cantor, ASA
Gary Hatfield, FSA, CERA
Ian Laverty, FSA, MAAA
James Kosinski, FSA, MAAA
Michael Destito, FSA, CERA
Robert Zhan, FSA, CERA
Suzanne Chatterton, FSA
Xuan Deng, FSA, MAAA
At the Society of Actuaries:
Barbara Scott, Sr. Research Administrator
Steve Siegel, ASA, MAAA, Sr. Practice Research Actuary
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