Description: Discussion of NAIC efforts to amend the annuity nonforfeiture laws to respond to falling interest rates.

Description: Discussion of how the weak equity environment has led to a growth in the sale of fixed annuities and fixed account allocations within variable annuities. Includes a description of typical product design features and changes in the nonforfeiture laws to accomodate the low interest rate environment.

Description: This article explores the effectiveness of hedging delta and rho of equity options. This provides insight into the frequency and severity of losses due to not hedging volatility risk or other higher order risks. 10yr-equity put option strategies were chosen to represent the risk of hedging guaranteed benefits attached to variable annuities, while 1-yr put and call strategies were modeled to investigate the risk of hedging equity index interest credited to fixed indexed annuities. In both cases, the value of the option was compared to the value of delta/rho hedges in the tail of both actual historical and simulated scenarios for equity returns and volatilities. The historical path of interest rates and equities was generally used to highlight the hedge impact for different implied volatility assumptions in each example.

Description: Structured-note annuities provide a retirement solution for the masses while allowing effective hedging and balance sheet usage for the insurance complex.

Description: Retirees and their advisors should construct diversified portfolios of retirement income, allocating among various retirement income classes that include Social Security, annuities, and systematic withdrawals from invested assets. This essay discusses the pros and cons of various retirement income generators and the issues with constructing retirement income portfolios.

Description: Fixed Annuities—Product Design and Investment Considerations

Description: An update on the principle-based reserves (PBR) process and possible valuation manual adoption, with recommendations to actuaries on how to prepare.

Description: This article discusses the impact of rising interest rates on annuity writers and life insurers and the risk management challenges it presents. Falling interest rates were addressed as well.

Description: Discussion of recent growth in fixed annuity sales and sales experience for small companies.

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.