John M. Bragg, FSA
Geoffery Crofts, FSA
Faye Albert, FSA                          

Harold I. Cohen, FSA

   Bragg Associates Actuaries
   

      

 

 

THE BRAGG BULLETIN
# 14: May 14, 2010

This is our annual BULLETIN dealing with the economy and yields.

The obscure maneuvers of the Fed in Money Supply (M2) are of interest. In 2008 money “was printed” – M2 being up 9.5%; but in 2009 the increase was only a sub-average 3.4%. (In the first two months of 2010 the seasonally adjusted M2 actually shrunk slightly (-.8%).  This “burning” of money coupled with the exceedingly low short term interest rate (.05% on three-month bills) presumably reflect an attempt to control inflation. What Keynes would have thought, we don’t know.

2009 was the first year since 1938 when both the CPI and the GDP declined, and the three-month bill rate was practically zero. (1938 was the aftershock year of the Great Depression; Three-month bills yielded only .05% then, also.)

We regularly track the Theory of the Economic Series, using 13 economic, yield, and mood characteristics. The B (recovery) Period declared for 2008 continued throughout 2009. The “Great Recession” is however, very serious, and return to an optimistic C Period may not occur until 2011.  Prudent Asset Mix implications are shown below. It is notable that the Prudent Mixture Strategy (arising from the theory) did yield a decent 11.36% in 2009.

Congress recently passed the Health Bill. As long ago as 1977, the insurance industry (and the AMA) urged support of the “Burleson-McIntyre bill”, which was basically National Health Insurance, with cost controls, and using the valuable resources of private insurers. In effect, it has taken 33 years to pass!  At Bragg, one of our specialties, Health Expectancy, for individuals, can be used as a control tool. Increasing an individual’s “healthy period” is vital.

The Great Recession has been hard on the Life Insurance Industry, especially sales-wise. Now is the time to get back to the fundamentals: historic guarantees; simple term insurance; and traditional whole life. And with life settlements at hand, as well as market demands for secure annuities, let’s really try to understand old age mortality.

 

Mix

Present B Period

Forthcoming C Period

3-Month Bills

5%

0%

Long Term Treasuries

35%

15%

Common Stocks

60%

85%

The above information is purely statistical in nature and is based on a study of historical data. Bragg Associates does not give investment advice.

Bragg Associates, Actuarial Consultants, 28 Lenox Pointe N.E. , Atlanta, GA 30324

Phone (404) 231-3006; e-mail nbk@mindspring. com, www.braggassociates.com

Addendum For “Protecting Against Inflation and Maximizing Yield”

By John M. Bragg – published by Georgia State University

 

ECONOMIC DATA following page 24

Year

Period

CPI

GDP

M2

Unemployment Rate

 

 

 

 

 

 

2000

A

3.4%

3.7%

6.1%

3.9%

2001

AB

2.8

0.8

10.7

5.7

2002

B

1.6

1.6

6.0

6.0

2003

BC

2.3

2.5

4.7

5.7

2004

C

2.7

3.9

6.0

5.4

2005

CD

3.4

3.2

4.0

4.9

2006

DA

3.2

3.3

5.1

4.4

2007

AB

2.8

2.0

5.2

5.0

2008

B

3.8

0.4

9.5

7.4

2009

B

-0.4

-2.4

3.4

10.0

120 Years

 

2.8

3.4

6.2

5.9

YIELD DATA following page 24

 

Year

3 Month Bills

Long Coupon

Long Bond

Yield Curve

Stock Dividend

Stock Total

PMS* Yield

Best Strategy

 

 

 

 

 

 

 

 

 

2000

5.82

6.23

20.3

1.07

1.1%

-9.1%

7.18%

LT

2001

3.40

5.63

4.2

1.66

1.2

-11.9

2.10

LT

2002

1.19

4.96

16.8

3.00

1.4

-22.1

-7.32

LT

2003

.93

5.07

2.5

5.45

2.00

28.7

21.43

CS

2004

2.22

4.83

7.7

2.18

1.8

10.9

10.42

CS

2005

4.07

4.53

6.5

1.11

1.9

4.9

5.02

LT

2006

5.00

4.81

1.85

.96

2.03

15.8

8.15

CS

2007

3.31

4.45

9.81

1.34

1.93

5.5

6.08

LT

2008

.07

2.81

24.03

40.14

1.84

-37.0

-13.78

LT

2009

.05

4.68

-12.92

93.6

2.69

26.46

11.36

CS

120 Years

 

3.86

 

4.96

 

5.4

 

1.28

 

4.2

 

10.3

 

10.13

 

 *PMS (Prudent Mixture Strategy) is a managed balanced portfolio described in the book. To obtain book or earlier data, contact Bragg Associates, 28 Lenox Pointe NE, Atlanta, GA 30324. Phone (404) 231-3006 or e-mail nbk@mindspring.com

To:  Interested companies and organizations

 

Raw Data Available from Bragg Associates

 

          For more than 30 years, Bragg has assembled raw data for life insurance and other coverages.  We are extremely grateful to our many data contributors.  The raw data have allowed us to do our work in table construction and mortality research generally.

          Due to requests we have received, and the felt need for internal research, we are now making raw data blocks available.  We attach a list of some major ones.  Data are in our long-used useful formats.

          The data are of interest for specialty subjects such as old age mortality, brokerage term mortality, preferred issues, true select periods, etc.

          For further information, please contact Nancy Koppes or Jack Bragg.

                    Bragg Associates
                    28 Lenox Pointe NE
                    Atlanta, GA  30324
                    Phone:  (404) 231-3006
                    e-mail:  nbk@mindspring.com
 

 

Data are in our standard “white green sheet” format, by quin issue ages, and duration groups 1, 2, 3-5, 6-10, and 11-15. 
Breakdown is given by NSM, SM, NSF, and SF.

 

 

Years

Exposure

 

Exposed

($billions)

 

 

 

Standard plus Preferred

 

 

“The Large Block”

95-03

5,128

Data for 2002 BLT

95-99

  2,170

Attained Ages 65+    

95-03

  1,171

Attained Ages 90+

95-03

 

Policy Size Group (9 bands)

90-94

1,234

 

 

 

Preferred Only

 

 

Data for 2007 BLT

94-03

1,604

Upper Market Segment

94-03

650

Ages 90+

95-04

 

Ages 80-89

85-04

 

 

 

 

Modern Non-Medical

 

 

Standard

90-94

76

Preferred

90-94

47

 

 

 

Simplified Issue

 

 

Standard

90-92

162

Preferred

90-92

7

 

 

 

Non-Underwritten

 

 

Standard

90-94  

39

Preferred

90-94  

9

 

 

 

Leveraged COLI

 

 

Other Employees

85-94

52

Preferred/Managerial

85-94

5

 

 

 

Contact Information:  Bragg Associates, Inc., 28 Lenox Pointe, Atlanta, GA  30324. Phone:  (404) 231-3006.  e-mail: nbk@mindspring.com   

 
Health Expectancy

Faye S. Albert, John M. Bragg and James C. Brooks, Jr.

Presented at the Living to 100 and Beyond Symposium

Orlando, Fla.

January 7-9, 2008

 

 

2007 Bragg Life Tables and Underwriting Rules
Select and Ultimate Mortality Rates - $1.6 Trillion Recent Preferred Business Exposed

Super Preferred Class I, Preferred Class II, Overall Preferred, Smoker Preferred

In Addition the Report Contains Exhibits on:

  • Trend Factors
  • Select Period in 2007 Bragg Life Tables
  • Credibility of Older Age and Brokerage Term Data
  • Cause of Disability at Issue
  • Standard Residual Non-Preferred Business
  • Model Underwriting Rules for Preferred Business
  • Effect of Changing Underwriting Rules for Preferred Status
  • Preferred Smoker Research
  • Guides to Underwriting of Older Age Business
  • Typical Underwriting Requirements by Size Band - All Business
  • Socio-Economic Underwriting Methods
  • Principles-Based Reserves - Applications
  • Comparison of 2007 Bragg Life Tables with Various 2001 Valuation Basic Tables

For Pricing and Additional Information Click Here


Other Bragg Associates Reports:
 

Old Age III
Including Bragg Immediate Annuity Tables –Preferred - Report consists of recent raw data  on super-preferred lives, ages 60-105

2002 Bragg Life Tables
 Select data submitted by 15 companies; Covers the period 1995 – 1999.

Guaranteed Issue/Simplified Issue
Studies all forms-true group to individual non-underwritten.  Controls for sound handling

Study of Mortality by Policy Size Groups
Raw data study, on a subset of all Bragg data

New Bragg Preferred/Standard Life Tables
Select and Ultimate Mortality Rates  Four Nonsmoker and Two Smoker Classes

The Effects of Smoking on Health Insurance Costs
Consolidated Report

Report on Critical Illness Insurance
The Complete Guide to Pricing, Policy Form Wording, Underwriting, Claims Administration, and Regulatory Requirements for CI Insurance

One Day Seminar on Older Age Mortality, Underwriting, and Product Pricing
Bring  your group to Atlanta, or we will come to you. Jack Bragg will conduct a full day seminar.

Initiatives

Custom Mortality Investigations

Bragg Associates Health Expectancy

Health Savings Accounts

Description of Bragg Associates Data Elements and Formats

David G. W. Bragg
Copyright © 2006 John M. Bragg and Associates, Inc. All rights reserved.                                                   
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