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32
Life Insurance Company
Investments

Francis H. Schott

Chapter Outline

HISTORICAL PERSPECTIVE
Effects of Inflation and Technology
Interaction between Regulators and Rating Agencies
LIFE INSURANCE PORTFOLIO MANAGEMENT
Role of the Industry in Investment Markets
Investment Organization and Principles
Practical Investment Decisions and Problems
Some Technical Aspects of Investment Management
REGULATION OF LIFE INSURANCE INVESTMENTS
Overview and Brief History
Traditional Regulation
Liberalization and the Beginning of Retraction
Model Investment Law, Expanded Asset/Interest Reserves, Risk-based Capital Standards
LIFE INSURANCE INVESTMENTS AND COMMERCIAL RATING AGENCIES
Reasons for Rating Agencies� Important Role
Glimpse into the Future

Over the past 20 years the role of investment performance and policy has evolved from being a mere adjunct of product and sales management to becoming the lifeblood of a life insurance company. Instead of insurance driving investment, we encounter in the 1990s a dynamic interaction of the two sides of the business. Overall success depends on the profitable integration of the accumulation and disposition of funds.

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