The variable annuity market has been hit hard by the financial crisis. With equity markets tumbling and volatility hitting unprecedented highs, a succession of insurance companies have reported colossal losses on their hedging of variable annuity guarantees. Most attention has so far been on US providers - by far the most active in this space (Risk November 2008, pages 47-49). But European insurers have not escaped, with several posting outsized losses of their own.
The problems stem from the se
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