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Managing Investment Risks of Insurance/Annuity Contractual Designs

Background and Purpose

The sophistication of contractual designs for insurance and annuity products has increased over many years. As the designs have evolved, it has been thought that there is a distinct link between insurance/annuity contractual design and the ease vs. difficulty in managing the investment risks of the contract. An example is variable annuities - one can guarantee a floor value (initial contribution), guarantee a return targeted to an index return, or have a ratchet guarantee, where the last high water mark is always guaranteed. These contractual provisions may contribute to how risky the product could be to manage. But, what exactly is the nature of the link and how weak or strong is the connection between the design and the investment risk management of the product? With this in mind, the SOA’s Committee on Finance Research and the CAS/CIA/SOA’s Joint Risk Management Section (JRMS) are interested in an exploration of this link and its impact on future products and contracts.  

Research Objective

The Committee on Finance Research (CFR) and Joint Risk Management Section (JRMS) are seeking researchers to document various contract designs and how they evolved to either increased investment riskiness (possibly to increase sales) or decreased investment riskiness (possibly to protect the company). The following are examples of proposed topics that may be addressed:

  • To what extent are contractual design and risk management interlinked during a product’s introduction? What are examples of products where it becomes stronger? What are examples of where it becomes weaker?
  • How does the link vary for different products? What products have a strong link? Which are examples of a   weak link?
  • What forces impacted contractual design over time to drive risk management? Which forces were internal to a company vs. outside influence?
  • Are there specific provisions that are common to multiple products that impact investment risk management across products?
  • How can the investment risk associated with contract design be evaluated?
  • How does the design’s sophistication and new forces impact the evolution of a company’s risk appetite and ALM strategy?

Note that the above list is not meant to be exhaustive but merely examples of proposed topics that may be researched.


To facilitate the evaluation of proposals, the following information should be submitted:

  1. Resumes of the researcher(s), including any graduate student(s) expected to participate, indicating how their background, education and experience bear on their qualifications to undertake the research. If more than one researcher is involved, a single individual should be designated as the lead researcher and primary contact. The person submitting the proposal must be authorized to speak on behalf of all the researchers as well as for the firm or institution on whose behalf the proposal is submitted.
  2. An outline of the approach to be used (e.g. literature search, model, etc.), emphasizing issues that require special consideration. Details should be given regarding the techniques to be used, collateral material to be consulted, and possible limitations of the analysis.
  3. A description of the expected deliverables and any supporting data, tools or other resources.
  4. Cost estimates for the research, including computer time, salaries, report preparation, material costs, etc. Such estimates can be in the form of hourly rates, but in such cases, time estimates should also be included. Any guarantees as to total cost should be given and will be considered in the evaluation of the proposal. While cost will be a factor in the evaluation of the proposal, it will not necessarily be the decisive factor.
  5. A schedule for completion of the research, identifying key dates or time frames for research completion and report submissions.  The CFR and JRMS are interested in completing this project in a timely manner.  Suggestions in the proposal for ensuring timely deliver, such as fee adjustments, are encouraged.
  6. Other related factors that give evidence of a proposer's capabilities to perform in a superior fashion should be detailed.

Selection Process

The CFR and JRMS will appoint a Project Oversight Group (POG) to oversee the project.  The CFR and JRMS are responsible for recommending the proposal to be funded.  Input from other knowledgeable individuals also may be sought, but the CFR and JRMS will make the final recommendation, subject to SOA leadership approval. The SOA's Research Actuary will provide staff actuarial support.


Any questions regarding this RFP should be directed to Steven Siegel, SOA Research Actuary (phone: 847-706-3578; email:    

Notification of Intent To Submit Proposal

If you intend to submit a proposal, please e-mail written notification by October 1, 2018 to Barbara Scott.

Submission of Proposal

Please e-mail a copy of the proposal to Barbara Scott.

Proposals must be received no later than October 15, 2018. It is anticipated that all proposers will be informed of the status of their proposal by the end of November 2018.

Note: Proposals are considered confidential and proprietary.


The selection of a proposal is conditioned upon and not considered final until a Letter of Agreement is executed by both the Society of Actuaries and the researcher.

The CFR and JRMS reserve the right to not award a contract for this research. Reasons for not awarding a contract could include, but are not limited to, a lack of acceptable proposals or a finding that insufficient funds are available. The CFR and JRMS also reserve the right to redirect the project as is deemed advisable.

The CFR and JRMS plan to hold the copyright to the research and to publish the results with appropriate credit given to the researcher(s).

The CFR and JRMS may choose to seek public exposure or media attention for the research.  By submitting a proposal, you agree to cooperate with the CFR and JRMS in publicizing or promoting the research and responding to media requests.

The CFR and JRMS may also choose to market and promote the research to members, candidates and other interested parties.  You agree to perform promotional communication requested by the CFR and JRMS, which may include, but is not limited to, leading a webcast on the research, presenting the research at an SOA meeting, and/or writing an article on the research for an SOA newsletter.