Description: In the early 1990s, when several large U.S. and Canadian life insurers teetered on the brink of insolvency and finally collapsed, the U.S. Department of Labor issued its 'safest annuity' provision [DOL Interpretive Bulletin 95-1] ruling that private pension plans buying annuities had the fiduciary obligation to choose the 'safest available' provider. This article examines the effect this ruling has had on the annuity market.

Description: Life and annuity markets around the world have seen increasingly complex investment-combined products, including universal life, fixed indexed annuities, variable annuities with a wide variety of guaranteed benefits, indexed variable annuities, etc. Insurance companies are facing unprecedented exposure to financial risks in addition to traditional mortality and longevity risks. The risk assessment and modeling for such complex designs by conventional methods often focus heavily on their market competitiveness and profitability. However, there seems to be a lack of quantifiable and systematic approach to assess investment risks associated with investment combined products. The objective of the proposed work is to develop a framework for quantifying and analyzing various forms of contractual designs and showcase different techniques to assess the trade-off between competitive contractual designs and their practical implications with regard to the difficulty of risk management.

Description: In the past decade, U.S. life and annuity insurance companies’ utilization of asset-intensive reinsurance internal reinsurance has grown significantly. Many reinsurers and insurers have set up entities or affiliates in Cayman, with many more in the pipeline. Here we will discuss Cayman’s reinsurance market growth momentum, and the main benefits that Cayman offers.

Description: The author proposes an annuity clearinghouse to encourage employers to offer annuity accumulation products in their defined contribution plans. This addresses the lack of portability that is associated with, and discourages the use of, defined contribution plans.

Description: This paper applies the research in Prospect Theory of Kahneman and Tversky to explain why sales of annuities lag sales of life insurance products. The author theorizes that life insurance is easier to sell because customers perceive themselves to be in the domain of losses, while potential annuity customers perceive themselves to be in the domain of gains. Kahneman and Tversky showed us that people are mostly risk averse in the domain of gains and risk seeking in the domain of losses. Purchase of an annuity or life product is a risky investment. Customers will find it easier to take the risk in the life insurance domain of losses than the annuity domain of gains. The author then proposes a hybrid life annuity product that might address both mortality and longevity risk in one product that would allow both products to be more competitive than stand-alone products.

Description: The article analyzes Private Letter Ruling 202031008, which considers how Internal Revenue Code sections 72(q) and (u) apply to an annuity contract issued to a trust. In particular, the Ruling interprets the terms “taxpayer,” “holder” and “held by” in those Code sections in situations where a non-qualified deferred annuity contract is issued to a grantor trust or a non-grantor trust. The Ruling’s analysis and conclusions differ in some respects depending on which of these types of trusts is involved. In addition, although the Ruling does not address sections 72(s) or 72(e)(4)(C), the Ruling has potential implications under those provisions because they also use the term “holder” and “holds,” respectively.

Description: it discusses the framework and modeling of the market consistent valuation of fixed indexed annuity, against the backdrop of the convergence of accounting standards and internal risk management.

Description: The author offers his proof that an annuity for the life expectancy exceeds a life annuity.

Description: This article is a discussion about the trends and changes affecting the life insurance industry by impacting product growth. Read how today's ideas can become tomorrow's successes.

Description: This article examines the changes in U.S. regulatory reserve and risk-based capital requirements that will significantly impact the insurance industry and practicing actuaries. It summarizes activity related to principles-based reserves and risk-based capital initiatives during 2005.