Defined terms for the annuity market and lifetime income landscape.
GAAP versus statutory accounting is the structural comparison between the two parallel financial-reporting frameworks US insurance carriers operate under — GAAP for investors and statutory accounting for regulators — which produce materially different reported figures for the same business.
Immunization strategy is a portfolio construction technique that arranges the assets backing a set of liabilities so the carrier's net financial position at a target horizon is approximately preserved against interest rate changes that occur between now and that horizon.
Interest maintenance reserve (IMR) is a statutory reserve that captures realized gains and losses on fixed-income assets attributable to rate movements and amortizes them into income over the remaining life of the assets sold, preventing rate-driven trading from distorting current statutory surplus.
Investment yield is the rate of return earned on the assets in an insurance carrier's general account over a stated period, net of investment expenses, from which the carrier credits contract owners, funds reserves, and retains its economic margin.
Liability-driven investing is an investment philosophy in which the structure and composition of an asset portfolio is set primarily by reference to the obligations the portfolio must fund, rather than by reference to a market index or an absolute return target taken in isolation.
