Variable annuities and turbulent markets
Recent capital market conditions have reinforced the strength of the variable annuity product proposition. Offering exposure to equities and managed fund investments, with the possibility of protecting against the risk of downside market movements, the products are supported by active hedging techniques. Milliman's Gary Finkelstein explains why these products are so attractive, and how some insurance companies have been able to successfully manufacture them during the recent turbulent markets
What are variable annuities?
Under a variable annuity (VA) product, the policyholder's investments consist of managed funds selected to provide exposure to upside market performance. Additionally, optional guarantee insurance can be purchased to protect the policyholder's investment from negative market returns. A wide range of guarantees can be offered, as described below, enabling the benefits to be tailored to meet the varying needs of customers.
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