|By Ronald J Panko|
|A.M. Best Company, Inc.|
Goulart said while the company did not anticipate rates would fall so dramatically, it understood the potential risks of that happening. "We understood what it would mean to our portfolio, and when we investigated what we would do about it, we discovered that adding protection at that time was very cheap." The other good news about this protection is it runs beyond 2020 and well into the next decade, he said. Since 2004, the company accumulated almost
Goulart oversees about
Despite the low-interest-rate environment and the difficult economy, Goulart said he is very confident the company's general account is appropriately invested and will perform well.
"It's all about asset/liability management," said Goulart. "We have the right asset portfolio and certainly the right amount of assets to repay our liabilities. That's our critical function, to repay our liabilities and generate an adequate return to our shareholders."
To achieve that, Goulart said the investment management team seeks to understand the liabilities the company is generating on a daily basis and to develop investment strategies to match them. "We make sure we can always outperform those liabilities and return to shareholders an adequate return," he said.
A fundamental strength is the company's credit underwriting process that qualifies every fixed-income instrument it buys. Then, said Goulart, the company employs its enterprise risk management function, which helps to evaluate overall portfolio and economic risk. Finally, the company uses systems that help monitor and stress the portfolio risk limits, sector risk limits and asset-class limits that it sets.
Virtually all of
The company has about
Audio of the interview with Goulart is available at http://www.ambest.com/media/media.asp?RC=194768
|Copyright:||(c) 2011 A.M. Best Company, Inc.|