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AXA Reports $270 Million In U.S. VA Guarantee Exposure

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NU Online News Service, Nov. 14, 9:47 a.m. – The AXA Group, Paris, says its U.S.-based AXA Financial unit and a sister unit, AXA Corporate Solutions, had about $270 million in liabilities Sept. 30 that were related to variable annuity death benefit and variable annuity income guarantees.

The company already has $72 million in reserves backing the variable annuity guarantees, and it will be adding $198 million in new reserves, AXA says.

Investors have worried in recent months that low stock prices and low interest rates might be triggering variable annuity guarantee provisions while interfering with insurers’ ability to earn enough income on their own assets to cover the cost of making good on the guarantees.

The accounting rules that govern U.S. public companies keep AXA from recording a liability for the variable annuity guarantee features, but, using other rules, the liability would be $118 million for the death benefit guarantees and $51 million for the income guarantees on the variable annuities sold by AXA Financial, AXA says.

AXA reports that AXA Financial has reinsured 15% of its exposure to the death benefit guarantees and 70% of the exposure to the income guarantees.

AXA Corporate Solutions has assumed responsibility for another $101 million in variable annuity guarantees through reinsurance arrangements, AXA says.