In January 2007, Gary Wendlandt was concerned concerning the US economy. As Chief Investment Officer of the New York Life Insurance Company (NYLIC), he was responsible for managing a $147 billion investment portfolio. The US home market was weakening at a time when financial institutions had significant assets tied up in mortgage -backed securities and collateralized debt obligations. Wendlandt depicted his anxiety in a memo to Ted Mathas, the Chief Operating Officer of NYLIC.
This would require putting more of the new cash flows of NYLIC into safer fixed income products. NYLIC had a responsibility towards its policyholders. It was the administrations duty to safeguard the longevity and fiscal strength of the business, in order that distribute payments from annuities, it might continue to pay policyholder claims, and problem dividends. Wendlandt confronted a classic risk/return tradeoff - i.e., lower current interest income to avert the higher possible risk of capital losses. How should he correct the investment portfolio of NYLIC?
PUBLICATION DATE: June 01, 2013 PRODUCT #: NA0213-PDF-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
Related Case Solutions & Analyses:
Lyondell Chemical Company
Business of Golf: Islington Golf Club
Internet Securities Inc.: Financing Growth
Finance for Managers Business Fundamentals Series
Telewizja Wisla
Toronto-Dominion Bank — Money Monitor
Compania de Telefonos de Chile
Capital Assets Pricing Model
Shady Trial
Societe International de Plantations et de Finance (SIPEF)
