3 Reasons Why a VA GMIB Post-Annuitization Mortality Study Is Needed NOW

 

1.  Industry exposures have begun to increase dramatically as GMIB blocks age.

 

2.  Regulatory changes. With new VM-21, assumptions should be developed separately for GMDB-only and GLB segments and should be based on directly applicable experience data.  And with GAAP LDTI, data analysis should improve to support annual reviews and clear rationale for best estimate assumptions.  In both cases, the increasing exposures above and the importance of long-term mortality to valuation strongly point to the need for analysis of GMIB post-annuitization mortality.

 

3.  Longevity selection effects are already evident. From the huge volumes ($880 billion ending account value) and emergence of long term-experience data in our industry experience studies, we see strong longevity selection effects for GMIBs and other types of GLBs.  This motivated our recent work to refine our proprietary Ruark VA mortality table to split between higher-mortality GMDB-only and lower-mortality GLBs, with further longevity selection reductions for GLBs in the initial years after issue.  Both indicate that at the first big moment of possible longevity selection, at issue, it happens.  So we think that at the next big moment, at GMIB annuitization, we should carefully examine the data to see whether it does there too.

 

By March 31, we are seeking data and purchase commitments via our 2020 Order Form.  If you have not already done so, please contact us to receive the data template or if you have any questions.  By April 15, we will determine if we have a critical mass and communicate a go/no-go decision.  If we proceed, we will share a more specific target date for completion in H2 2020.

 

Contact:  Timothy Paris, timothyparis@ruark.co, 860.866.7786