Fixed indexed annuity evolution poses reserving challenges

The US annuity market is evolving. Fixed indexed annuities are gaining ground on variable annuities, and new hybrids are entering the market. Are regulators able to keep up with the pace of change?


Fixed indexed annuities (FIAs) are booming in the US. In the third quarter of 2013 alone, FIA sales hit a record $10 billion (£6 billion) and 2014 is set to be the market’s best ever year. As the competition between providers heats up, insurers are becoming ever more inventive in how they design and package these products, which pay policyholders an interest rate linked to the performance of a selected equity index.

Many providers have attached guaranteed riders such as lifetime withdrawal or

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