A.M.BestTV: ‘First Monday’: Legacy Variable Annuity Blocks Pressure

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best’s latest episode of “First Monday,” the monthly program featuring commentary by the company's leading analysts, looks at how legacy variable annuity (VA) blocks are still a concern, primarily due to rich guarantees and lapse-rate risks.

Click on: http://www.ambest.com/v.asp?v=fmannuities415 to view the entire video program.

2014 was a solid year in the equity markets, and this helped to improve the performance of insurers’ VA blocks. However, challenges do remain from the legacy VA blocks of business. In this episode, Rosemarie Mirabella, assistant vice president, addressed just how deep these worries are and what actions companies are taking.

“A.M. Best’s concerns are primarily around the tail risk as it relates to the embedded richness of the guarantees, the equity market risk, interest rate risk and policyholder utilization,” said Mirabella. “Nevertheless, companies have taken a number of actions in recent years to mitigate these concerns, such as: changing rider fees, product redesign, reducing the levels of guarantees, re-pricing to reflect lowering interest rates, lapse assumptions and changing the asset allocation strategies. Companies are also making sure not to take on excessive balance sheet risk.”

Recent episodes of A.M.BestTV include:

• Insurers Uncover New Opportunity in Old Data: A new report that explores emerging opportunities for insurers by focusing more intently on the data they already have to better identify and service customers and prospects: http://www.ambest.com/v.asp?v=data415.
• Lloyd’s North America President Hank Watkins: Syndicate Consolidation Creates Opportunity: Hank Watkins, president of Lloyd’s North America, explains how consolidation among Lloyd’s syndicates is not a threat to the world’s oldest insurance market: http://www.ambest.com/v.asp?v=watkins315.

• Treasury Secretary Says Firms Can Challenge and Exit Systemically Important Financial Institution Designation: At a recent U.S. Senate hearing, U.S. Treasury Secretary Jack Lew told U.S. lawmakers that being designated a Systemically Important Financial Institution does not have to be permanent: http://www.ambest.com/v.asp?v=fsoc315.

• Insurers Respond to Risks of Identity Theft: Insurers are fighting the increasingly complex threats to privacy and security by deploying new risk protection offerings, as identity theft has been the number one complaint filed with the Federal Trade Commission for the last 15 years: http://www.ambest.com/v.asp?v=idtheft315.

A.M.BestTV covers exclusive A.M. Best information and reports, targeted topics and key developments in the (re)insurance industry every Monday, Wednesday and Friday. Sign up for alerts of episodes at http://www.ambest.com/multimedia/ambtvsignup.html. View A.M.BestTV episodes at http://www.ambest.tv.

A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

A.M. Best Company, Inc.
Lee McDonald, 908-439-2200, ext. 5561
Group Vice President, Publication and News Services
[email protected]

Source: A.M. Best Company, Inc.

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