The broad decline in financial markets worldwide had a significant impact on the insurance industry. Asset-intensive financial products, such as variable annuities with guarantees, have presented various challenges for insurance companies. In 2008, market declines and the ensuing market volatility resulted in losses even for companies with the most sophisticated market risk management programs, as unhedged residual risks took a toll on statutory surplus.

The Pension Protection Act of 2006 included some key provisions that addressed for the first time the taxation of combination annuity plans featuring long-term care insurance (LTCI). The rules apply only to nonqualified annuities coupled with tax-qualified long-term care riders.