Revised GMDB Reserving Is Advancing
Revisions to a proposed actuarial guideline that interprets valuation for reserves for minimum guaranteed death benefits in variable annuity contracts is advancing toward a year-end approval by state insurance regulators.
A revised Actuarial Guideline 34 would apply to VAs with GMDBs that potentially could exceed account value. There is concern that in policies such as dollar-for-dollar contracts, a small account value could be retained by the contract holder locking in the higher GMDB obligation.
The draft revision would apply to contracts that include return of premium, roll-ups, ratchets and resets. It would only apply to group VA contracts subject to the Commissioners Annuity Reserving Valuation Method.