LDI – as easy as buying a house?

In doing training sessions on LDI, trustees can often (quite rightly) get concerned with the complexity and the mechanics. I think this is often because LDI is looked at as a standalone product. Which it is not. As we have talked about before it is important to start from basics and understand first what you…

Gambling, Insurance and Derivatives

Tim Harford wrote an interesting piece for BBC this week on the line between gambling and insurance. He also mentioned derivatives which piqued our interest. In the article, Harford recounts that the Lloyds insurance market originated as a group of people taking a bet on topical events and evolved into a bigger group of people…

Doris

Doris is a Highland cow who lives on my family’s farm on the edge of the Peak District. As you can see she seems quite happy in the snow. In fact Doris is comfortable whatever the weather. Most of the other breeds of cattle struggle in the winter but Doris can easily cope due to…

Probabilities – the gift that keeps on giving

When I left the office last night the probability of Trump winning the US presidential election was 15%. We had some very keen people in the office tracking the odds as shown below: In the night the probability of a Trump win dipped to 9% – we all now know what happened next. I am…

Do valuation assumptions matter?

I have read with interest First Actuarial’s article on recasting  the PPF7800 index using, what they believe may be, more “realistic” assumptions for asset returns. For those who haven’t read it the data look promising. The latest PPF7800 numbers quote a funding level, based on mark-to-market assumptions, of 78%(i.e. a Gilts based discount rate). First…

Wine. Cheese. Derivatives.

What do you think of when you think of derivatives? At the PLSA conference in Liverpool last week we attempted to answer this question. We played a word association game with visitors to our (wine and cheese based) stand. We asked “What is the first word that comes into your head when we say each…

The challenge of developing true FinTech

“FinTech” is all the rage these days. However, simply having some technology in a finance firm does not encapsulate the spirit of FinTech – not only must the technology work and meet the needs of the business, but it must also serve to change the way things are done. There is a real risk to…

Longer than a Snapchat timer – a graduate’s view on pensions

A new flock of recent graduates has been unleashed from university this past summer; starting work across a range of grad schemes. I graduated a year ago, so I consider myself part of that group at 22. At a recent housewarming party I brought up the topic of pensions and mortgage savings: you can imagine…

Being cashflow negative is a symptom, not a cause

There is an increasing weight of discussion around the challenge of schemes being cashflow negative (i.e. pension schemes are net disinvestors as benefits are greater than sponsor contributions). This was specifically raised in the Pension Regulator’s Annual Funding Statement with subsequent research from Hymans Robertson highlighting this as a worry for CFOs. The apparent risk…