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Reader Response to August 2011 Ratings: Consequences of US Downgrade

Thursday, September 15, 2011

Last week, we wrote about the impact of the US Downgrade on the ratings of insurance companies.  However, we inadvertently approached this Ratings e-Alert issue like any other.  Clearly, the downgrade of US debt is an unprecedented event, and as such, last week’s Ratings e-Alert issue should have considered those matters unique to this unprecedented event.  Fortunately, a good friend of THEInsuranceAdvisor.COM – Dick Weber of Ethical Edge – brought this to our attention and was kind enough to author a “response” to the "August 2011 Ratings: Consequences of the US Downgrade" .  


In his response, Dick provides a well-reasoned explanation for how financial strength and claims-paying ability ratings are ONLY one of the major elements to consider as part of determining the overall suitability of a life insurance product, and cautions against comparing illustrations ofHYPOTHETICAL policy values to determine whether a “new” policy can do a better job than the “old,” in-force policy.  Thanks to Dick for his willingness to contribute to the emerging, higher standard-of-care for life insurance product selection and portfolio management. 


For those of you not yet familiar with Dick's presence in the industry, he is a 45-year life insurance veteran (yes, he was a child agent!).  For 25 years a successful life insurance agent and 20-year life member of the Million Dollar Round Table, Dick and his firm now provide fee-only analytics and consulting services to family offices and high net worth individuals.


An academic in his spare time, his most recent publication, co-written with Christopher Hause, FSA, MAAA, is Life Insurance as an Asset Class - A Value-added Component of an Asset Allocation, was honored with a 2008 Best Paper Award from the Academy of Financial Services.  Hause and Weber published a second volume in the Asset Class series - Managing a Valuable Asset - in December 2010.  In addition to these two ground-breaking research papers, the two authors are best known for their unique process of applying Monte Carlo and industry standard expenses to the assessment and remediation of in-force variable universal life.


Dick's firm is located in Northern California, and he can be reached by email  The firm's website can be accessed


Lastly, if you are interested in also contributing to and/or participating in the dialogue about the emerging, higher standard-of-care for life insurance product selection and portfolio management, please contact Sarah Riedel at with your ideas for an e-news article. 

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