From the Editor's Desk
An Insurance Journey

• Patricia Vowinkel
• May 2020
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Life as an insurer gets its start with high hopes.

Demand for a new type of coverage emerges. Resources are allocated as underwriters begin writing the new business.

Eventually, certain lines of business run out of steam for one reason or another. It may be that the business did not do as well as expected. Or senior management decides to allocate resources differently. Some insurers may do so poorly that they end up in receivership and may eventually become insolvent.

The May issue of Best's Review looks at the end stage of the insurance industry life cycle—the runoffs, restructurings and rehabilitations.

Even during “normal times” the industry has a rhythm, an ebb and flow of successes and failures. During these times of pandemic, strategic questions about the best use of resources may become even more relevant.

Throughout the United States and globally, nonessential businesses have had to close and many people have lost their jobs.

The statistics are staggering. As of early April, some 16.8 million lost their jobs in the three weeks before Easter. That amounted to about 1 in 10 U.S. workers, the biggest, fastest loss of jobs since record-keeping began in 1948, according to the Associated Press.

The full significance of what has been happening is still hard to fully understand. AM Best's Ann Modica spoke about the economy:

“Growth in the United States will slow dramatically in the second quarter due to social distancing efforts as they reverberate throughout the economy. We basically need to cause a recession in order to curtail the spread of the disease. This will impede consumer spending significantly. As a result, we do see a consumer-led recession starting in the second quarter of 2020 and likely continuing throughout the year. In addition to weak consumer spending, we also see weakness in U.S. exports, global growth is also being affected by the coronavirus as all the countries around the world are affected.”

The coming months will be marked by regulatory and legal battles over coverage and losses. As these events unfold, insurers may take a closer look at their operations and review their strategic alternatives.

May is Runoff and Restructuring Month. In “The Rise of Runoffs,” Best's Review looks at developments in an extremely active nonlife run-off and legacy management market.

“Making the Move” looks at how states are revising insurance regulations to allow for more insurance business transfers.

In “Heading Off Track,” Best's Review looks at a few insurers that have been ordered into rehabilitation and the overall trend in rehabilitations and liquidations.

“Losing Weight” examines closed blocks of life insurance.

The May issue of Best's Review also includes the 2019 Corporate Changes. This had previously been published annually in the June issue. Starting this June, Best's Review will begin to publish the Corporate Changes on a more timely basis, each month rather than just annually.