The Penn Mutual Inflation Protector variable annuity was launched in November 2010.

This variable annuity product incorporates a living benefit feature and is designed to provide owners with an income base that keeps pace with the rate of inflation.

The income base of the Penn Mutual Inflation Protector increases based upon the greater of:

In a recent and highly recommended Bloomberg op-ed, Carmen Reinhart discusses the options available to governments and central banks when attempting to deal with the burden of enormous amounts of public and private debt.

Reinhart suggests that the preferred policy option for many governments--including the United States--is a form of stealth taxation that amounts to financial repression.

Warren Buffett’s most recent shareholder letter focuses on the merits of productive assets such as equities in light of the current low interest rate environment and the potential for future inflation.

Buffett’s view is that although productive assets are variable and volatile, they are more likely to preserve future purchasing power than the fixed or currency-based alternatives.

Canadian insurer Sun Life recently announced that it will exit the variable annuity and individual life insurance markets in the United States.

Continued equity market volatility has resulted in a variable annuity business that is plagued with uncertainty and higher costs.

Insurers such as Sun Life offer guarantees that are linked to the performance of underlying equity portfolios.  These guarantees are a liability for the insurance company, and equity market volatility contributes to the cost of these liabilities.

New China Life is seeking to raise $2.3 billion in an initial public offering that would list the company on exchanges in Shanghai and Hong Kong.

New China Life is seeking the capital in market conditions that have been challenging for many of its peers.

China Life Insurance Company and Ping An Insurance have both seen their stock prices decline over 30 percent this year.  China Pacific Insurance Group has dropped more than 20 percent this year.

Annuity criticisms are a dime-a-dozen. 

The majority of financial advisors seem to have some issue with annuities, consumer perception is generally terrible and the financial media often appears to provide a reflection and reinforcement of prevailing sentiment.

There is a case to be made for “control of assets” as the common denominator for both the consumer and financial advisor perspectives.

Control of assets basically refers to the fact that annuities involve handing over money to an insurance company. 

While it might be an unusual time to provide an explanation of Swiss annuities given what has been taking place of late with the Swiss franc and related decisions made by the Swiss National Bank, it still makes sense for any financial services consumer to understand potential benefits of these products.

A common question is how annuities compare to other financial products that seem similar such as bonds, certificates of deposit (CD) and money market funds.  After all, each of these products promises to provide some type of fixed return in exchange for your investment. 

Looking at a simple life annuity can help answer this question and may also highlight what makes the life annuities unique among all financial products. 

Anyone thinking about retirement income should pick-up a copy of Retirement Portfolios by Michael Zwecher.  This recommendation applies to both financial services professionals and consumers who are approaching or at retirement. 

Zwecher’s book is the definitive guide to constructing and maintaining portfolios that generate sustainable retirement income.  

A recent article in Bloomberg discusses the state of capital market solutions for the transfer of longevity risk.

The reality is that the longevity market is still in its infancy and there are a number of obstacles that are affecting its development.

One of the main hurdles involves the fact that longevity risk is very long-term in nature.  Securities that mature over the course of 20 years are not hugely appealing to hedge fund managers who are providing quarterly performance reports to their clients.