Even as one regulator called variable annuities “toxic products,” industry representatives were saying the current draft actuarial guideline creates reserves that are redundant and too conservative.
The discussion took place during a meeting of the Life & Health Actuarial Task Force of the National Association of Insurance Commissioners, Kansas City, Mo. LHATF voted 11 to 3 to present a draft of a guideline for comment., and it expects to approve the guideline in September as a step toward full adoption by the NAIC by Dec. 31, 2007, of the actuarial guideline known as the Commissioners Annuity Reserve Valuation Method.
New York regulator William Carmello argued the reserving requirements should be more conservative because of the options in VAs.
“It is a product that I view as toxic and that could definitely bring a company down in an instant,” Carmello said.
Variable annuities with guarantees are offering promises that not even reinsurers are willing to take on, according to Carmello. “That’s got to say something,” he added.