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

To download the full report, click here.

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.


We're hiring!

We're excited to announce an opening for a new Data Engineer position at Ruark. The Data Engineer will be a hands-on contributor to our data analytics team, responsible for managing our data architecture and for ongoing data development. The ideal candidate will be a creative problem solver experienced in data management. For more information or to apply, please click here.


A busy September is coming up. Hope to see you in our travels...

Eric Halpern and Tim Paris will be moderating a few sessions at the SOA's first-ever Predictive Analytics Symposium, and we are delighted to be one of the corporate sponsors for this exciting event.

Tim Paris will be attending the BILTIR Life and Annuity Conference. Keynote speaker is a long-time favorite of our's and many...

Both events are still open for registration.

Date
September 14 - 15, 2017

Location
Swissotel Chicago
Chicago, IL

Date
September 19, 2017

Location
Southampton
Bermuda

 


Ruark Behavioral Analytics Advisory Council - next call June 23 at 2pm Eastern

Our next meeting is coming up soon.

This is by invitation only, so please RSVP if you have not done so already, or contact us if you are interested.  We plan to share 3 key things:

  • Starting the modeling process with relevant industry data, then tailoring to each company, typically leads to better assumption models than what an individual company can do using only its own data. We will demonstrate this with model factor selection, standard error terms for coefficient estimates, and actual-to-expected ratios.
  • Integration of models across behaviors is important. We will demonstrate this by showing the impact of partial withdrawal history on surrender behavior.
  • In collaboration with the UCONN Goldenson Center for Actuarial Research, we have developed a very powerful modeling approach for partial withdrawal behavior, particularly for GLWBs and the like, reflecting the impact of partial withdrawal history as well as behavioral variations between large ad hoc withdrawals and true income-related withdrawals. We will outline our process for developing these models and how to tailor them to each company, and share sample output.

Friendly reminder that our 2017 FIA industry studies and spring VA industry studies have been completed and are available for purchase, along with related assumption model development and benchmarking services.  If you are a data-contributing client and know what you would like to purchase, please contact us and we will arrange delivery and discussion. Or if you have any questions that would aid in your decision-making, please let us know. Our 2017 service and pricing summary can be found here.


Our 2017 plans for behavioral analytics

platform_ruarkbg

 

Are your assumptions informed by credible industry experience?

 

checkWe provide a powerful combination of industry- and company-level experience studies, predictive modeling, traditional analytical techniques, and expert judgment, based on seriatim monthly data since 2007, covering approximately 70% of the annuity industry.

Is your analytical framework robust as new data emerges?

checkWe work with you to customize and implement our behavioral analytics framework, with transparent linkage from experience data to assumption models, naturally suited to regular updates for inforce and new business.

Are your analytics granular enough to mitigate anti-selection and proactively manage changes in your business mix?

checkWe address the many factors of influence and their changes over time, including product and guarantee type, surrender charge period and duration, moneyness of guarantees on actuarial and nominal bases, contract size, tax status, age, gender, distribution channel and compensation structures, and income utilization and efficiency.

Is speed important to you?

checkIt is to us too. We provide the timely and immediately actionable results you need to efficiently manage your company’s behavioral risks.

 


We aim to be the platform and industry benchmark for principles-based insurance data analytics and risk management.


 

2017 VA and FIA Behavioral Modules

For each of: Options
VA Surrenders       VA Income Utilization       VA GMIB Annuitization       FIA Surrenders       FIA Income Utilization 1 2 3
Experience Studies – industry results in aggregate, along with your company results, in a detailed report with numerical exhibits covering key factors, cohorts, and dynamics
Customized assumption model – initially calibrated to industry results, and tailored to your company based on credibility techniques
Review of your current assumptions, and comparison to the customized model above
Benchmarking of your results relative to peers
Presentation and discussion with our team
Membership on our Behavioral Analytics Advisory Council

 

va-fia_timeline

 

Would you like to learn more about implementation and pricing?

Contact: 

Timothy Paris
860.866.7786


Behavioral Analytics for Annuities - Presentation slides from 2017 SOA Life & Annuity Symposium

Behavioral Analytics for Annuities - presentation slides from 2017 SOA Life & Annuity Symposium (session 82). Thanks to those attending...great interactive discussion.

Click here to open the slides


How well can you model GLWB behavior?

In collaboration with UCONN's Goldenson Center for Actuarial Research, we have developed a remarkable approach to modeling policyholder behavior for deferred annuities (particularly GLWB income utilization), with strong goodness of fit to historical data and high predictive power. All of this is fueled by industry-level data, and then tailored to each company using credibility procedures. Actuaries, A/E ratios in the 99-101% range?! Yes, it can be done. Hit us up.


Join us at the 2017 Retirement Industry Conference

Tim Paris will be moderating the session "Leadership Perspectives: Industry Benchmarking, Behavioral Analytics, and Executive Communication". Hope to see you there.

https://www.soa.org/prof-dev/events/2017-retirement-industry-conference/


Podcast - Growing Your Company’s Predictive Analytics Capabilities.

Steve Wright and Tim Paris participated in this podcast of the Society of Actuaries' Predictive Analytics and Futurism section.

Predictive Analytics Case Study – Growing Your Company’s Capabilities

February 22, 2017

Length: 16:11

Sponsor: Predictive Analytics and Futurism Section

Description: Listen in as Shea Parkes, FSA, MAAA interviews Timothy Paris, FSA, MAAA and Steve Wright, FSA, MAAA from Ruark Consulting.  Tim and Steve have developed predictive analytics expertise at their company over the last few years.  They share stories from that journey and some suggested resources for others wanting to do the same.

https://www.soa.org/prof-dev/podcasts/predictive-analytics-podcasts/

http://traffic.libsyn.com/soapodcasts/SOA_17_01_PAF_01_-_Predictive_Analytics_Case_Study.mp3


Insights

We aim to be the platform and industry benchmark forprinciples-based insurance data analytics and risk management.