Less benefits, higher costs as insurers retool annuities

“Retrenching, even to a small degree, on the generosity of variable annuities represents a reversal for the insurance business. Insurers in recent years have chased the potentially lucrative baby-boomer market by making more elaborate promises to ease the boomers’ concerns of outliving their money in an age when life spans are increasing and traditional pensions are on the decline.

“But amid the bear market, insurers’ shareholders have fled the stocks on concerns about the mounting costs of making good on the guarantees, many of which are complex and difficult for consumers and investors alike to decipher. Analysts also are worried about the hedging strategies insurers adopted to protect themselves against the cost of the guarantees,” the Journal reports.