New Frontiers: Backing Long-term Insurance Liabilities with Non-fixed-income Assets

By David Hong, Monish Arora and Carl Elia · TD Asset Management Inc. · 2022 · CP351-110-25

A TD Asset Management commentary on how Canadian life insurers can back long-term insurance liabilities when the structure of the Canadian fixed income market limits their hedging options. It argues that a carve-out strategy, which backs liability cash flows beyond a chosen horizon with non-fixed-income assets such as equities, real estate or infrastructure, may generate returns by compensating for the limited availability of long-term credit, and illustrates it with a case study.

On the syllabus

Exam CP-351 — the whole paper; outcome 2d.

At a Glance

Characteristics of the Canadian Fixed Income Market

The suitability of carve-out strategies

Real Estate and Infrastructure

A case study

Economic benefits
Capital efficiency
Financial statement impact
Derivative overlay

How TDAM can Help

Sources

New Frontiers: Backing Long-term Insurance Liabilities with Non-fixed-income Assets (TD Asset Management Inc., 2022) — the document: title, authors, headings and the opening for the lead; the PDF carries only the print code 0522 and data as of 31 December 2021, and the year comes from the landing page
Backing Long-term Insurance Liabilities with Non-fixed-income Assets (TD Global Investment Solutions) — the commentary's landing page, dated May 24 2022
CP 351 Introductory Study Note, Nov 2026/Mar 2027/Jul 2027 (SOA) — the study-note code CP351-110-25 and its title
CP 351 Syllabus, Nov 2026/Mar 2027/Jul 2027 (SOA) — the assignment and the learning outcome