Tim Paris sharing policyholder behavior insights in London


Non-traditional Life Insurance Products with Guarantees:From Variable Annuities to CPPI

8th - 9th March 2017, London

Tim Paris will be sharing policyholder behavior insights from the US market at the Non-traditional Life Insurance Products with Guarantees event next week in London.  http://www.training.risk.net/va/static/home

National Retirement Sustainability Index

Updated for 2015 data. Taking a broader perspective beyond our usual focus on policyholder behavior analytics, here is a great reminder from UCONN's Goldenson Center for Actuarial Research about why annuities and other retirement savings and income products are so important.


New book: Non-traditional Life Insurance Products with Guarantees

Ruark CEO Timothy Paris, contributed chapter 9 (modeling and managing policyholder behavior risks) to this new book. Even better, all royalties are pledged to UNICEF. If your company is a client of Ruark, we are glad to subsidize your purchase -- please contact us for a 35% discount code.

Great stocking stuffer for yourself or beloved actuaries and quants!


SOA Annual Meeting presentation slides are available for download

soa2016-annual-mtgSOA Annual Meeting presentation slides are available for download

Thursday, November 3, 2016

Tim Paris presented and was a moderator at the 2016 SOA Annual Meeting.  Included are links to the engaging sessions Tim participated in.


Session 40 Panel Discussion: How Would I Get Started With Predictive Modeling?

Competency: Technical Skills & Analytical Problem Solving
Moderator(s): Douglas T. Norris, FSA, MAAA
Presenter(s): Timothy S. Paris, FSA, MAAA; Sandra Tsui Shan To, FSA, MAAA; Qinqing (Annie) Xue, FSA, CERA, MAAA
View presentation pdf.


Session 97: Variable Annuity Guaranteed Living Benefit Utilization Studies and Benefit Utilization in Fixed Indexed Annuities.

Competency: External Forces & Industry Knowledge
Moderator(s): Patrick David Nolan, FSA, MAAA
Presenter(s): Jafor Iqbal; Joseph E. Montminy, ASA, MAAA; Timothy S. Paris, FSA, MAAA
View presentation pdf.


Session 83: Panel Discussion: Product Development Impact of the Department of Labor Fiduciary Rule

Competency: External Forces & Industry Knowledge
Moderator(s): Timothy S. Paris, FSA, MAAA
Presenter(s): Colin Devine, CFA, CFP, CMA; Daniel J. Rueschhoff, FSA, MAAA; Yuan Tao, FSA, MAAA
View presentation pdf.

Fixed Indexed Annuity Industry Mortality Study October 2016

Wednesday, October 12, 2016


Press Release

Fixed Indexed Annuity Industry Mortality Study
October 2016

Key Observations

  • 1st ever FIA industry mortality study. With the growth in the FIA market, particularly with GLWB features, Ruark has responded to the industry’s demand for what we believe to be the first FIA industry mortality study.
  • FIA mortality experience is different. Similar to what we have seen in our variable annuity industry mortality studies since 2007, standard annuity mortality tables offer a poor fit to observed FIA experience, tending to understate mortality rates at both ends of the age spectrum. FIA mortality also varies widely across the companies participating in the study.
  • FIA contracts with GLWB have approximately 20% lower mortality. This is an expected selection effect considering the longevity-based benefits provided by GLWBs.
  • Mortality also varies by duration, tax status, and contract size. FIA mortality increases gradually by contract duration, and is significantly lower for qualified contracts with and without GLWBs. However, significantly higher mortality is evident for large contracts.
  • Caution is warranted amidst a changing regulatory landscape. The potential implementation of the “fiduciary rule” may affect the mix of qualified and non-qualified FIA business, and agent and policyholder behavior more broadly. Prudence suggests careful monitoring of experience results and more granular assumption development.

Participating Companies

AIG Life & Retirement
American Equity
Midland National
Pacific Life
Security Benefit

Overview and Methodology

Ruark’s FIA and VA industry studies include policyholder behavior such as surrenders, income utilization, mortality, and annuitizations, which are vitally important to the long-term financial performance of these products. Through the experience study process and discussions with us, participating companies gain a detailed understanding of complex industry results and comparison to their own company results for benchmarking purposes. The 13 participating companies contributed 11 million contract years of data and 165,000 deaths for this study, covering the period January 2007 through September 2015.

About Us

Ruark Consulting has completed dozens of policyholder behavior experience studies for the annuity industry and individual companies since 2007, spanning surrenders, partial withdrawals and living benefit utilization, annuitization, and mortality. We are recognized leaders in annuity risk management, policyholder behavior analytics, and reinsurance brokerage and administration.


Timothy Paris | Chief Executive Officer | 860 866 7786 | timothyparis@ruark.co

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Ruark at upcoming SOA events in Oct-Nov 2016

ruarkspeakingevents_wideTimothy Paris will be speaking at session 040 about getting started with predictive modeling, session 097 about FIA GLWB utilization experience, and moderating session 083 about the product development impact of the pending fiduciary rule.

Also, Ruark is again one of the corporate sponsors of the Equity-Based Insurance Guarantees Conference (Chicago, Nov 14-15). Tim will be speaking at session 2B about policyholder behavior risks and industry experience data.


SOA Leadership & Development Section newsletter article by Timothy Paris

I find leadership inspiration in many places—books and movies, fiction and nonfiction, old and new, widely popular and niche. But I tend to revert to the classics. And from a leadership standpoint, I think that... Read the rest of the article here in The Stepping Stone SOA Newsletter.

Ruark annuity industry studies: what's available now, and what's on the way?

With policyholder behavior risks back in the headlines recently, we wanted to share with you 3 big things that we have available for you.

 Fall 2016 VA studies:  available in early October

Our studies cover surrender, partial withdrawal, and GMIB annuitization experience through 2016 Q2.  We provide detailed analysis of key behavioral drivers such as surrender charge period and duration, types of guarantees (GLWB, GMIB, etc.) and moneyness measures, contract size, age, tax status, distribution channel, and more, along with anonymous benchmarking across companies.  We quantify dynamic lapse sensitivity, floor surrender rates for deep-in-the-money contracts, cohorts and efficiency measures for partial withdrawal utilizations, and GMIB annuitization rates; all critical assumptions impacting the balance sheet and long-term profitability.  The study reports and detailed numerical exhibits will be accompanied by our "3D" tool, to allow for your own exploratory analysis of the data.

2016 FIA mortality study:  available now

We completed this study recently, and to our knowledge it is the first of its kind for the FIA industry.  The results are quite interesting.  As we have seen with VA mortality for many years, FIA mortality does not follow the shape of standard annuity tables, has significantly lower mortality for contracts with GLWB, and varies by contract size and between qualified and non-qualified contracts; all important considerations, particularly in light of the pending fiduciary rule implementation.

Customized assumptions and predictive modeling:  available now, and more to come

Throughout the last few years, we have also made a significant investment in predictive modeling capabilities, as part of a larger effort to provide you with more comprehensive behavioral analytics services that build on the industry experience studies as you have come to know and love them.  In short, we want to help you translate the complex experience data to assumptions as efficiently as possible.  We have done this by developing a process to calibrate baseline behavioral models to the industry data, and then customize those models to each company's characteristics.  We shared this process with our new Behavioral Analytics Advisory Council in the spring, and we have already completed two client projects along these lines with excellent results in terms of goodness-of-fit and predictive power.  We expect continued growth in this vital and innovative area. Our 2017 plans for these comprehensive behavioral analytics services, including industry experience studies and benchmarking, and customized assumption models calibrated to this data are coming soon.

Please feel free to contact any of the Ruark team with any questions.  We look forward to supporting the continued success of you and your company in this important work.

2016 Fixed Indexed Annuity - Industry Study Summary

Key Observations – Surrender & Partial Withdrawal Behavior

  • Surrender Charge – early results show a clear dynamic. The presence of the Contingent Deferred Sales Charge (CDSC) keeps industry surrender rates in single digits. However, in the year following the expiry of the CDSC, average rates jump by a factor of 5. Since FIA CDSC periods tend to be long and thus industry experience relatively new, the story regarding the shock duration and ultimate rates is still developing.
  • Overall surrender rates declining slowly but steadily. Over the 8 years studied here, surrenders have declined. This is most apparent at the shock duration even with the limited credibility for earlier years mentioned above. But even in the years prior to the CDSC expiration, there has been a decline from high single digits by more than half in recent years.
  • Why the decline in surrender rates? The increasing prevalence of a living benefit rider has had the effect of making policies stickier. Additionally, the stock market recovery, leading to more favorable interest credited rates, has contributed to this pattern of declining surrender rates.
  • Especially the living benefit rider – The effects of the presence of living benefits are clear as surrender rates for policies with a living benefits rider are half the level of those without one.
  • Withdrawal utilization, living benefit rider vs. not – Contracts without a living benefit rider frequently take withdrawals – almost 1/3 of them do in an average year. They also take withdrawals of higher amounts than those with an LB rider. Policies that do have a rider tend to be active (prior to turning on lifetime income) as well, but at lower rates, in the realm of 1/4 of contracts.
  • Primary factors influencing FIA withdrawal behavior are attained age and tax status (regardless of LB presence), particularly on qualified contracts with owners over age 70. Duration since issue also has some effect but is of lesser consequence.

On the horizon – Items to keep an eye on for future FIA studies:

  • Credited interest rates – contracts with the lowest interest credited rates (<2%) had materially higher surrender rates, but that effect was limited to that bucket. Will the market recovery and accompanying higher credited rates consistently lead to more satisfied customers and so better persistency?
  • Living benefit value – the dynamic effect, where more valuable guarantees correlate with lower surrenders, is well-established in more mature markets such as variable annuities. This effect has been hard to discern so far with FIA living benefits due to the newness of the guarantees.  What will that dynamic curve look like as it develops?
  • Living benefit utilization – the incidence of FIA living benefit owners turning on lifetime income has been very low. Will that continue or will there be an uptick?  If the latter, what will be the triggers?

Participating companies:

  • AIG Life & Retirement
  • American Equity
  • Athene
  • EquiTrust
  • Forethought

  • Genworth
  • Midland National
  • Nationwide
  • Pacific Life
  • Phoenix
  • Protective
  • Security Benefit

Industry overview and methodology

Ruark’s FIA and VA industry studies include mortality, surrender, and partial withdrawal policyholder behaviors that are vitally important to the long-term financial performance of these products. Through the experience study results report and discussions with us, participating companies gain a detailed understanding of complex industry results and comparison to their own-company results for benchmarking purposes.

The number of FIA participating companies and volume of data studied has grown steadily since we started studying these behaviors in 2010. The 12 participating companies, contributed 10 million contract years of data for these latest studies, covering the period January, 2007 through September, 2015.

About us

Since 2007, Ruark has completed dozens of annuity experience studies that facilitated vital understanding of industry policyholder behavior.  We are recognized leaders in annuity risk management, policyholder behavior analytics, and reinsurance brokerage and administration.

Contact:  Joel Lagan | 860 930 5069 | joel@ruark.co | www.ruark.co

VA GLWB Product Debuts in New Zealand

The launch of New Zealand’s first variable annuity with guaranteed living benefits is imminent. The article is an overview article in the SOA International Section magazine.