Milliman Survey Says Dominate Variable Annuity products guar

 

Wednesday, Apr 01,2009, 2:39:53 PM   Click:

Copyright: PR Newswire
Source: PR Newswire
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SEATTLE, March 31 / PRNewswire / - Milliman the fourth year of life assurance (GLB) for the investigation of variable annuities in the United States (VA) revealed that carriers around 96% of variable annuities offered include some form of GLB.

Sales of volunteers who offer a GLB during calendar year 2004 averaged 87% of total VA sales increased 95% in 2005 and 2006. These benefits continued to be popular in 2007 and during the first half of 2008 with 96% of total VA sales offer a GLB.

Buying GLBs by policyholders also continued to increase from 2004 for the first half of 2008. During the calendar years 2004 to 2007, the average rate GLBs election was 52%, 62%, 63% and 62%, respectively. During the first half of 2008, the figure jumped to 69%.

Different combinations of four types of GLBs is usually offered in the VA: the provision of guaranteed minimum income (GMIB), guaranteed minimum withdrawal benefits (GMWB), Guaranteed Lifetime Withdrawal Benefit (GLWB) and the Guaranteed Minimum Accumulation Benefit (GMAB ). Election rates reported by participants for GLWBs from 2004 through the first half of 2008 ranged from 61% to 93% on average of total sales of volunteers who provide GLWB. Election of GMWBs rates have declined as the popularity of GLWBs has increased and the customer must often choose between the two. The election rates GMWBs by survey participants reported for the first half of 2008 averaged about 14% compared to 25% reported for the calendar year 2004. A growing percentage of total VA sales were combination offers GRM / GLWBs. This design typically tracks GRM GLWB and function of the insured and not to force the police to the election or the other options on an autonomous basis. Although the combination offers GRM / GLWBs was increasing, the average rate of the elections fell by 58% in 2005 to 37% during the first six months of 2008.

In general, the popularity of GMIBs declined somewhat in recent years, although some companies have maintained a high rate election. GMIB election rates were reduced on average by 49% during 2004 to 25% during the first six months of 2008. Average rate of election GMAB decreased by 21% in 2004 to 10% in the first half of 2008. The share of total VA sales in which no GLB was elected dropped from 48% in 2004 to 37 - 38% during 2005 to 2007 and to 32% during the first six months of 2007.

In addition to sales and election rates GLBs, the study also includes information on investments, the rates of the year, the product design and pricing and hedging.

Variable annuity carriers that issue at least one type of GLB were invited to participate in the survey. Twenty-one airlines have participated in the survey, which is indicative of the high level of interest in this subject in today's market. Sales reported by 21 participants representing over 41% of the VA market. Thirteen of the 21 participants were ranked in the top 20 based on new VA sales (according to Morningstar Inc. The Vārds s Report).

GLBs provide guarantees on the volunteers who would otherwise consider the equity risk profiles. The typical GMIB guarantees that income from a deferred VA will not be less than an amount calculated by applying the rules specified option at a rate of basic guaranteed benefit. Eligibility for guaranteed income payments in most models GMIB requires seven to ten years the waiting period is met. GMAB generally ensure that the account value will not be less than a specified percentage (usually 100%) of premiums paid after a number of years. GRM / GLWBs guarantee the amount of partial withdrawals, regardless of the value of the performance. GRM designs included a guarantee to a certain amount, usually a refund of premiums paid. Drawings GLWB ensure the withdrawal of life rather than a certain amount.

About Milliman

Milliman is among the largest independent actuarial and consulting firms. Founded in Seattle in 1947, Milliman & Robertson, the company currently has 49 offices in key locations around the world. Milliman employs over two thousand people, with a team of over a thousand of Actuaries and qualified consultants, including specialists ranging from clinicians to economists. The firm has consulting practices in healthcare, employee benefits, property and casualty insurance, life insurance and financial services. Milliman serves the full spectrum of business, finance, government, unions, education and nonprofit organizations. For more information, visit www.milliman.com.

SOURCE Milliman, Inc.

CONTACT: Noel Abkemeier, +1-757-259-7424, or noel.abkemeier @ milliman.com or Sue Saip, +1-312-499-5607, or sue.saip @ milliman.com