Financial Crisis

Structured Product Risks are a Hot Topic

Structured products are hot. U.S. sales rose 46 percent in 2010 to $49.5 billion. The appeal is understandable in the wake of the financial crisis. As folks in the indexed annuity business know, a floor of principal protection or "guaranteed" income combined with some upside potential is an easier sell in the current environment. Structured products also happen to be a hot topic with regulators. For example, FINRA just issued a warning to investors about structured products with principal...

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Annuity

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Robert Merton's Retirement Income Lecture

MIT Professor Robert Merton addresses the challenge of financing retirement income in a lecture delivered this past January.

Merton briefly discusses the financial crisis and suggests that it is unproductive to think about digressing to a financial world that preceded Glass-Steagall and financial innovation. Merton’s view is that financial engineering is indispensable in addressing the large and complex issues of pension and retirement finance.

Merton’s basic prescription for improving the general state of retirement finance includes increasing savings, working longer, taking more risk. Most would agree with the first two choices but the third—taking more risk—seems...

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What Retirees Should Make of the Low Volatility, No-Fear Market

The fear index seems to be signaling that all is well.

The Chicago Board Options Exchange...

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Sequence of Returns Risk

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Annuity Product Persistency Levels are Increasing

Annuity persistency refers to whether people hold on to their existing annuity products or exchange them--typically through a Section 1035 exchange --for new products. Higher levels of persistency suggest that annuity owners are sticking with existing products which are likely more valuable than what would be available in the current market through an exchange.

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Annuity

Capital Market

Guaranteed Living Benefit

Section 1035 Exchange

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Annuity

Capital Market

Guaranteed Living Benefit

Section 1035 Exchange

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ING Preparing for IPO of U.S. Insurance Business

The Dutch financial services company ING Groep is preparing for an initial public offering (IPO) of its U.S. based insurance business. The company agreed to split its banking and insurance businesses when it gained approval from the European Commission to receive government funds during the financial crisis. ING has spent considerable time and resources addressing issues related to its U.S. variable annuity business, and the company feels that these efforts are almost complete with the business...

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