The availability of reinsurance for variable annuities with guarantees continues to be scarce and costly, according to David Hopewell, a senior actuarial advisor with Ernst & Young, Philadelphia.
For many companies, the answer continues to be the use of in-house hedging programs, he says.
But, Hopewell continues, establishing an infrastructure is costly and requires scale in the variable annuity market. However, he declined to say whether the move to scale is presently occurring. But, according to Hopewell, observing companies he has seen, by a 2-1 margin, companies are taking hedging operations in-house.