The variable annuity (VA) industry is undergoing a transformation in response to the global financial crisis. VA products with their associated guaranteed living benefits are in high demand as the Baby Boomers transition into retirement. VAs provide customers with the ability to participate in a diversified portfolio of investments with protection against severe, sustained declines in the market. However, it is not clear that the life insurance industry can continue to offer VAs without fundamentally changing the manufacturing process for the creation and management of variable annuities. This article highlights the need for a new approach to VAs, the Sustainable Manufacturing Model, and illustrates the basic components of the process. Milliman is actively working with life insurers, asset managers, and distributors to implement this new model.

Presentation from the SOA 2010 Life & Annuity Symposium, May 17-18, 2010.

This report, summarizing results from Deloitte's 2009 study, provides insight in areas most critical to insurance executives:

• Marketing, product, and distribution
• New business
• Customer service
• Information technology
• Corporate overhead

Although the Korean variable annuities market has grown rapidly over the last five years and is fairly sophisticated in terms of product development, it is still lacking from a risk management perspective. Dynamic hedging is one of the best risk management strategies that Korean VA writers can adopt.

On behalf of NewRiver, Mathew Greenwald & Associates conducted an online survey of 500 consumers who own a variable annuity or variable universal life policy. The focus of the study was on investors in these two products because they have been noticeably slow in adopting e-delivery for prospectuses and compliance documents. The research was undertaken to help develop strategies to encourage policyholders to consent to e-delivery and to learn more about the reasons why individuals choose not to accept electronic documents.

Life insurers and life settlement professionals are taking opposite sides over a model state regulation that would let deferred annuity carriers terminate a living or death benefit if a policy owner sells the annuity in the secondary market.

Insurers that try to illustrate annuity performance graphically should provide at least 2 standard illustrations, veteran actuary Steven Ostlund of the Alabama DOI has recommended in a comment letter submitted to the NAIC's Annuity Disclosures Working Group.