The financial commitments of life insurers are typically long term, and generally
assets held to back these would be long-term and may not be liquid. If liquid
resources are not already available to meet a financial commitment as it falls due,
liquid funds will need to be borrowed and/or liquid assets sold in order to meet the
commitment. Losses would arise from the interest on borrowings and from any
discount that would need to be offered to realize assets. In the worst case scenario, a
life insurer may not be able to meet its commitments