A balanced structure?

Times are tough for Japanese providers of variable annuities. Two years since the severe downturn across equity markets caused significant losses on extensive VA guarantees provided to customers, life insurers now find their margins squeezed by low interest rates. Wietske Blees reports on the search for the perfect risk/reward structure

For the average Japanese retiree, variable annuities (VAs) are a win-win situation. By investing in a balanced fund with put option protection, the product combines investment with insurance features, in effect providing upside exposure when equity markets are buoyant, but ensuring principal protection when markets turn sour. Depending on the structure of the annuity, the investment is guaranteed to return at least the minimum capital invested at death of the policyholder, in the case of a