Market turmoil: What does it mean for annuity policyholder behavior?

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Executive Summary

We offer insights on expected annuity policyholder responses to recent financial market turmoil, gleaned from our studies of annuity policyholder behavior since 2007.

Variable annuity writers should expect:

  • Greater persistency overall, but elevated surrenders for at-the-money GLWB
  • Greater income utilization, especially for GLWB after the deferral incentive period and “hybrid” GMIB
  • Greater GMIB annuitization elections, especially on traditional “pro-rata” benefit forms

Fixed indexed annuity writers should expect:

  • Greater persistency for GLIB, and lower persistency without GLIB
  • Greater income utilization for GLIB

COVID-19 impact on mortality:

  • Will likely depend on the level of containment among the general population at retirement ages, with potential differences between those with and without living benefit guarantees

Ruark is uniquely positioned to help as risk management takes center stage:

  • We have the data from past times of crisis –monthly policyholder behavior and mortality data going back to 2007 covering about 70% of the market with over $1 trillion of current account values
  • We have developed predictive analytics techniques that use company- and industry-level data to help our clients improve their annuity pricing, valuation, and risk management models. Our approach is rigorous, transparent, and tailored to each company, allowing for quick implementation and quantification of improvement in financial risk profile from what they can do if limited to their own data.

To download the full report, click here.