NU Online News Service, Oct. 15, 3:30 p.m. – The winners in the variable annuity markets over the long haul will be carriers that maintain profitable pricing, even if it means losing market share in the short run, says a new analysis from Moody’s Investors Service, New York.
“The dramatic and prolonged decline in the equity markets over the past two and a half years has still not mitigated the intensity of VA market competition in the non-qualified market, particularly in those annuities sold through the broker markets,” Moody’s says in a new report, “Ghosts of Bubbles Past: Equity Markets Haunt Variable Annuities.”
Most VAs sold around the peak of the U.S. bull market will generate returns far below their manufacturers’ expectations, due to the fall in the equity markets, Moody’s says. Prices in the $100-plus billion in the VA market may not become more sensible until some competitors pull out of the market, which Moody’s describes as “overcrowded.”
Aggressive life insurers that built up VA assets near the top of the bull market would be hurt the most, the report says.