Ratings actions were again limited with nothing of note to report. However, there are plenty of newsworthy issues to be aware of:
· The Securities and Exchange Commission is pushing for greater disclosure for Variable Annuities (VA’s), especially for those using derivatives to enhance yields, the “guarantees” included in the products, and any limits on investment options.
· John Hancock announced they would be retreating from the annuity business, discontinuing a number of their VA’s and market-value-adjusted annuities. The reason – volatile equity markets and historically low interest rates. They follow Sun Life in de-risking their product line and ING and Genworth who have exited VA sales altogether.
· These VA changes come at a time when industry sales are booming – The Insured Retirement Institute recently reported that VA sales were up 38% over last year, reaching their highest level since 2007.
· Last month we reported there is a controversy about the adequacy of reserves for certain universal life policies with secondary guarantees. Moody’s recently published a statement reacting strongly to the possibility of rules changes being enacted retroactively, indicating that such a move could have a negative impact on both the credit rating and the bottom line of those affected.
· Moody’s also reported that MetLife, AIG and Prudential (and perhaps Berkshire-Hathaway) would qualify as systemically important financial institutions (SIFI) under proposed guidelines from the Financial Security Oversight Council (FOSC) under Dodd – Frank.
· One last note – a recent Wells Fargo survey indicated that 25% of today’s workers believe they will need to work at least until age 80 – sure made me feel better about still being at it!
Happy holidays – please give us a call if we can help you with any life insurance issues for you or your clients.