Variable annuity redesign led by US innovation
Variable annuity providers were hurt by basis risk, extreme volatility and policyholder lapses during the crisis, and guarantees were scaled back and repriced as a result. Now risk management is driving a US-led surge of innovation. Laurie Carver reports
The mix of transparently priced guarantees and a wide range of underlying investments made variable annuities (VAs) one of the success stories of the life insurance sector in North America and Japan. US-based insurance industry lobby group, Limra, estimated sales in the country peaked at more than $265 billion (£184 billion) dollars in 2008.
But the high level of consumer interest in this product in the years leading up to the financial crisis also set off an arms race among insurers to offer
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