Description: This article outlines the IRS directive published in July 2014, which provides a safe harbor treatment for variable annuity hedging gains and losses relating to VA contracts issued before Dec. 31, 2009.

Description: The article discusses a recent IRS private letter ruling granting IRC section 72(b) exclusion ratio treatment for amounts received from an innovative payout option.under a deferred variable annuity.

Description: Tidbits include discussions about: Policy loans in excess of cost basis, treatment of loss adjustment expenses, LAE, for life insurance companies, and separate account investments in group trusts.

Description: The IRS believes that any segregated asset account comprised of a pool of individual securities will run afoul of the investor control doctrine. This article articulates that such a conclusion would be deeply flawed based on the administrative, congressional, and judicial precedents involving the investor control doctrine.

Description: This article summarizes information on the regulatory aspects of variable annuities, both federal and state, and offers thoughts on corporate structure, product, marketing and sales commissions.

Description: ASU 2018-12 introduced a new concept called “market risk benefits” (MRBs). MRBs are a new accounting classification for benefits within deposit contracts, offering protection from “other than nominal market risk.” This applies to products with account values, including variable and indexed annuities with guaranteed living or death benefits attached (aka GMxBs). ASU 2018-12 Section 944-40-30-19D mentions both a non-option and an option-based valuation approach to account for MRBs. This article considers the option-based approach. The purpose is to highlight weaknesses in the current application of the option approach to MRBs, propose an alternative method, and consider the benefits of the new approach. The intent of this article is to persuade practictioners / actuaries / accountants that this is a better approach for applying the fair value option method to market risk benefits.

Description: Discusses the interactions between dynamic lapses and interest rates in stochastic modeling for variable annuities.

Description: This is a book review of The Variable Annuity, which the author recommends for a history and current status of this market. The book comments on the effect of variable annuities on stock prices.

Description: Discusses the problem with the computation of tax reserves for VA contracts with Guaranteed Living Benefit riders that were issued prior to December 31, 2009.

Description: This article discusses a new procedure for correcting inadvertent failures to satisfy the diversification requirements applicable to variable annuity and life insurance contracts under section 817h of the Internal Revenue Code.