FHLBank BostonProviding highly reliable wholesale funding and liquidity to member insurance companiesApril 2021Classification: Public1
Benefits ofMembership Easy to useLow-cost fundingImproves financial flexibilityFunding available in allbusiness cyclesViewed favorably by ratingagencies and regulatorsClassification: PublicKey MembershipQualification Criteria Insurance company duly organizedand subject to inspection and regulation Makes long term home mortgage loans(e.g. holds mortgage backed securities) Demonstrates character of managementand sound financial condition Membership is at insurance entity level2
Federal Home Loan Bank System Overview Established by Congress in 1932 to provide liquidity and funding to member institutions Regulated by Federal Housing Finance Agency and subject to the terms of FHLBank Act Cooperative Structure – Bank is owned by its members Offers Low Cost Loans to Members – Economies of scale, GSE Status, and Tax Exempt Status Extremely Secure – FHLB debt is the joint obligation of all 11 banksClassification: Public3
How the FHLBank System WorksAdvances( 423 Billion)InvestorsFHLBanksMembers 821 Billion AssetsCurrently anceProceedsFinancialProductsDebt SecuritiesDealersOffice of FinanceCustomersIssuanceProceedsAll debt securities issued through the Office of Finance are the joint and several obligations of the 11 FHLBanks. As of 4Q 2020 data.Classification: Public4
Rating Agency & Industry PerspectiveFHLB programs provide financial flexibility for insurancecompany members and are an attractive source of capitalbecause of the low rate offered on advances.– AM BestAccess to an alternative, low-cost funding source is creditpositive. The FHLBs offer eligible insurers access to lowcost, collateralized borrowing capacity for both theirordinary operating needs and emergency liquidity.– Moody’sFrom a source of emergency liquidity and working capitalto aiding asset/liability matching strategies, the aggregateamount of insurance company borrowing from FederalHome Loan Banks has accelerated for the last severalyears and may be poised to do so again in 2019.– SNL FinancialFitch Ratings believes that membership in the Federal HomeLoan Bank (FHLB) system can enhance liquidity and financialflexibility for insurance companies, particularly those insurerswith limited access to capital markets.The FHLB is able to source funds at very low rates due to itsposition as a government sponsored entity (GSE).– Fitch RatingsAlthough not immune to major market dislocations, the FHLBSystem has proven to be a stable source of funding throughgood times and bad.A material dislocation in financial markets will not likely affect theFHLB in providing insurers this alternative access to funding.– S&PThe borrowing capacity provided by the FHLB can be apowerful tool for managing risk and profitability.– NAMIC publicationClassification: Public5
Insurance Company Membership in the USStrong and steady increase in membership528500471528400436372393405FHLBank Insurance Company 411106Classification: Public
As of 4th quarter 2020Member Types – FHLB SystemNumber of MembersAdvances by Members (millions)6,697 410,289,00064 64,400 2971,559 4,273 177,3876303,916528 124,952Commercial BanksCommercial BanksInsurance companiesInsurance companiesSavings InstitutionsSavings InstitutionsCredit UnionsCredit UnionsCommunity Development Financial InstitutionsCommunity Development Financial InstitutionsClassification: Public7
As of January 1, 2021FHLBank Boston Insurance MembersLife CompaniesDepositors .18.26. Depositors Insurance Fund27. Mass Credit Union Share Ins.Amical Life InsuranceCommonwealth Annuity & LifeHartford Life and AccidentLincoln Life Assurance CoMass Mutual Life Insurance CoMerit Life InsuranceNational Life InsuranceNassau Life InsuranceNassau Life and AnnuityPHL Variable Life InsurancePrudential Retirement Ins AnnuitySBLI of MassachusettsStarmount Life InsuranceTalcott Resolution Life InsuranceTalcott Life and Annuity InsuranceUnum Life InsuranceVantis LifeVoya Retirement Insurance & AnnuityHealth Companies126.96.36.199.23.24.25.Aetna Life InsuranceBlue Cross Blue Shield of MABlue Cross Blue Shield of MA HMO BlueBlue Cross Blue Shield of RIBlue Cross Blue Shield of VTFallon Community HealthHarvard Pilgrim Health CareClassification: PublicP&C .188.8.131.52.184.108.40.206.50.AIM MutualAlliance of Non Profits, RRGAmerican EuropeanAmerican Excess, RRGAmica MutualArbella Mutual InsuranceAspen American InsuranceAspen Specialty InsuranceBarnstable County MutualBeacon Mutual InsuranceCitizens Insurance Co of AmericaCommerce Insurance CoConnecticut Attorneys TitleCoverys, RRGCW Reinsurance CoDanbury MutualDorchester MutualFitchburg MutualHanover Insurance CoHartford Fire InsuranceHingham MutualHospitality MutualHousing Authority Property .220.127.116.11.69.70.Housing Authority, RRGICI Mutual, RRGIronshore Specialty Insurance CoLexington Insurance (AIG)Liberty Mutual Insurance CoMaine Employers Medical MutualMedical Professional MutualMEMIC CasualtyMEMIC IndemnityMetropolitan P&C (MetLife)MMG InsuranceNarragansett Bay InsuranceNew London County MutualNorfolk and DedhamPeerless Insurance CoQuincy Mutual InsuranceSafety InsuranceVermont MutualUnited Educators, RRGYosemite Insurance8
(excludes captives)FHLBank Reliability During Market DislocationsThe FHLBs expand and contract based on member liquidity needs.COVID Financial Crisis 12023.5% increase in 1 quarter 100112.9 113.391.583.477.5 80Great Financial CrisisBillions286% increase over 2 years 6070.667.658.454.948.359.751.645.1 46.9 4028.7 203.15.18.011.1 11.514.2 0Classification: PublicTotal Insurance Company Advances9
FHLB advance rate compared to treasuries has beentightly correlated demonstrating its high qualityCorrelation coefficient .978Classification: Public10
FHLBank FundingAdvances (Loans) Easy one phone call access to funds Terms from overnight out to 30 years Fixed v. floating and bullet v. amortizing All types of derivatives can be embedded Same day settlement for term funding availableFunding Usage Cash managementEmergency/back up liquidityFill reinsurance payment gapsGain liquidity from illiquid assets Strategies for matching maturity& liability portfolio Additional revenue from spreadmanagement Interest-rate-risk managementFund asset growthuntil noon Overnight funding available until 5:00 p.m.Letters of Credit FHLB Boston is an NAIC approved bankfor Letters of CreditHousing Community Investment Affordable Housing Program Community Development Advance Finance SpecialEvents Other funding needs, e.g. M&A, fund retirement plan,purchase/renovate a buildingClassification: Public11
As a co-op structure, members purchase capital stockThe member purchases the following capital stock:StockMembershipActivityFrequencyof calculationAnnual – stock level can go up or downWhen borrowingCalculation.0020 x MSIR*(Membership Stock Investment Requirement).03 x overnight borrowings.04 x overnight borrowingsHow long heldHeld as long as entity is a member. Redeemed 5 years after termination.Eligible to be redeemed when borrowingmaturesAll membership & activity stock eligible to receive dividend.Eligible Assets (as of most recent quarter) Stock is always redeemed at 100 par value(never loses value) Capital calls not allowed Only risk is that Bank could hold onto excessstock or reduce/suspend dividendAmountLoansClosed-end Mortgages on 1-4 Family Dwelling Units Permanent Mortgages on 5 or More Family Dwelling Units Subtotal Loans Securities*MSIRU.S. Treasury and Agency Securities (excludes MBS) Residential MBS Guaranteed by GNMA or Issued by Fannie Mae & Freddie Mac Residential CMOs Guaranteed by GNMA or Issued by FNMA or FHLMC All Other Residential CMOs, REMICs and Strips All Other Residential Mortgage-Backed Securities Subtotal Securities Membership Stock Investment Base (loans securities)Classification: Public 12
The Borrowing Process1) Submit collateralAfter the haircuts, the value of pledged assets the total loans outstanding.InsuranceCompanyEligible Types of Assets for Collateral: Treasuries & other US SecuritiesAgencies (e.g. FNMA & FHLMC)CMBS AAA , AA, AMunicipal securities with real estate nexusResidential loans and Multi-family loansCommercial real estate loansCustodian Options18.104.22.168.22.214.171.124.9.Deliver to FHLBank BostonBank of America/US TrustBNY MellonCitiBankFifth ThirdJP MorganNorthern TrustState StreetWells Fargo2) Receive low cost fundingBorrowing capacity is 50 percent of admitted assets but could be limiteddue to amount of eligible collateral or financial condition3) Purchase activity stockMay be redeemed after borrowing matures.Overnight term 3 percent of borrowing Overnight term 4 percent of borrowingClassification: Public13
Summary Level Steps to MembershipSTEP 1See FHLBank Boston website for membership applicationSTEP 2Have the insurance entity’s Board of Directors pass a corporate resolution (see application)STEP 3Have insurance regulator acknowledge membershipSTEP 4Submit Application with following Statement that company supports housing finance mission by investing in related assets (MBS, etc.) Last quarterly and year-end statement filed with state commissioner, most recent regulatoryexamination report Brief bio of Senior Management, Most recent annual report, By-laws and Articles of Incorporation Statement that you meet NAIC capital requirements (Risk Based Capital minimum) List of established lines of credit Correspondent Services Agreement (in the application package)STEP 5Upon approval of membership or earlier: Submit legal counsel opinion (see application) #1 – 6 can be house counsel, #7 – 9 outside counsel Establish authorities with the Bank A custodian account will be established Purchase membership stock within 60 days of approvalActive FHLBank Boston MembershipClassification: Public14
13. Starmount Life Insurance 14. Talcott Resolution Life Insurance 15. Talcott Life and Annuity Insurance 16. Unum Life Insurance 17. Vantis Life 18. Voya Retirement Insurance & Annuity . Health Companies . 19. Aetna Life Insurance 20. Blue Cross Blue Shield of MA 21. Blue Cross Blue S
13 POINTS 3,600 wholesale 12 POINTS 3,000 wholesale 11 POINTS 2,400 wholesale 8 - 10 POINTS 1,800 wholesale 5 - 7 POINTS 1,200 wholesale 2 - 4 POINTS 600 wholesale 1,200 4 POINTS 800 - 1,199 3 POINTS 400 - 799 2 POINTS 100 - 399 1 POINT I am committed to attending success meetings each week. 3 POINTS I am committed to attending success meetings twice per .
Then, as the -nancial crisis unfolded, wholesale bank funding fell sharply, and has not fully recovered since. Importantly, moreover, the mode of wholesale -nance has undergone a transformation, as banks increasingly turn to short-term debt contracts that are collateralized. Since 2007 the share of such collateralized funding in overall .
lending activities. Wholesale funding markets allow banks to quickly raise large amounts of money for both short and long maturities. However, the cost and availability of wholesale funding depend on conditions in global financial markets, thus making it less stable relative to retail and commer-cial deposits.
Associated Wholesale Grocers - Version 1.0 810 Invoice Functional Group IN Version 005010 Mapping Procedures and Tips on Associated Wholesale Grocers’ 810 Document Associated Wholesale Grocers utilizes the 810 Grocery Products Invoice Set for all divisions within the company. The 810
Gold Status Vendors earn 10% Commissions on all of his/her Frontline* Standard Wholesale Sales Volume. Platinum Status Vendors earn 10% Commissions on all of his/her Frontline* Standard Wholesale Sales Volume plus 2% on sales volume from tiers 2-7 wholesale sales. * Frontline is
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ARM 24.174.1201-1213 Wholesale Drug Distributor Licensing: Every person engaged in manufacturing, wholesale distribution, which includes reverse wholesale distribution, or selling of drugs, medicine, chemicals, poisons for medicinal purposes, medical gases, or legend device other than to the consuming public or patient, in the state of Montana,
Wholesale clients are defined in Clause 4, Part 1, Schedule 5 of FMCA. As shown by the above definition, there are many different categories of wholesale client. In some cases, clients are automatically deemed to be wholesale (e.g. people with assets and turnover above certain thresholds, or people working within the financial services industry.)