Actuaries look to avert potential annuity-related ALM crisis

New Angles

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The American Academy of Actuaries (AAA) has suggested a new stochastic methodology for calculating capital requirements for variable annuities (VA) should be adopted, because the traditional factor-based approach is exposing US insurers to a potential asset-liability mismatch.

The AAA proposal is expected to go into effect in 2005. Currently, the National Association of Insurance Commissioners (NAIC), the US body that oversees state-run insurance regulators, requires insurers to use a standa