We would love to hear from you. Click on the ‘Contact Us’ link to the right and choose your favorite way to reach-out!

wscdsdc

media/speaking contact

Jamie Johnson

business contact

Victoria Peterson

Contact Us

855.ask.wink

Close [x]
pattern

Industry News

Categories

  • Industry Articles (16,526)
  • Industry Conferences (3)
  • Industry Job Openings (38)
  • Negative Media (138)
  • Positive Media (73)
  • Sheryl's Articles (617)
  • Sheryl's Blogs (175)
  • Wink's Articles (241)
  • Wink's Blogs (255)
  • Wink's Press Releases (93)
  • Blog Archives

  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • August 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • November 2008
  • May 2008
  • February 2008
  • August 2006
  • Annuity Issuers Eye Dodd-Frank Act

    August 6, 2010 by Katharine Rose

    Published 8/5/2010 

    The Dodd-Frank Wall Street Reform and Consumer Protection Act could increase the cost of the derivatives that insurers use in annuity programs, an executive says.

    The topic came up during a second-quarter earnings teleconference focusing on Prudential Financial Inc., Newark, N.J. (NYSE:PRU). Prudential reported $1.1 billion in total net income for the quarter on $11 billion in revenue, up from $163 million in net income on $6.9 billion in revenue for the second quarter of 2009.

    During the call, a securities analyst asked Prudential executives for their thoughts about how the Dodd-Frank Act might affect Prudential’s hedging costs and variable annuities.

    Mark Grier, executive vice president of financial management at Prudential, said uncertainty remains.

    “While the passage and signing of the bill represented a climax to the whole process of fixing everything, there’s a lot of work to do in terms of interpretation, writing rules and implementation,” Grier said.

    Grier said Dodd-Frank could cause have more than one type of effect on annuity operations.

    “I would anticipate that the providers of the long dated equity-linked derivatives that we use in our annuity business may be required to hold more capital,” Grier said. “As a result of that, we may see a more expensive environment in which to use  those derivative products. However, on the other side of it, the combination of clearing and possibly exchange rating with respect to a lot of other kinds of derivatives we use, particularly the more plain interest rate derivatives, may drive the cost of those derivatives down somewhat.”

    Other insurers have started to talk about the possible effects of the Dodd-Frank derivatives provisions in their second-quarter 10-Q financial reports.

    Hartford Financial Services Group Inc., Hartford (NYSE:HIG), says it believes the new derivatives clearing, margin and capitalization rules will increase the cost of its hedging program.

    MetLife Inc., New York (NYSE:MET), says the new derivatives requirements could reduce its liquidity and increase the cost of the derivatives it uses to protect itself against the risk associated with annuity guarantees. If the new rules limit MetLife’s ability to customize derivatives, that could also cause problems, the company says.

    VARIABLE ANNUITIES

    During the earnings call, Prudential executives also talked about the rebound in the variable annuity (VA) market.

    Prudential says its VA sales increased to $5.3 billion in the second quarter, up 57% from the total for the comparable quarter in 2009.

    “It’s hard for us to predict where the momentum stops,” said Bernard Winograd, chief operating officer of Prudential’s U.S. operations. “

    Prudential is not seeing competition for its Highest Daily strategy, Winograd said.

    Some people may be working on products that would enable them to imitate or compete more directly with the HD format, but building the systems to support that approach will take a great deal of time and resources, Winograd said.

    Much of the VA growth is coming from the opening of new distribution relationships that are selling more than existing distribution relationships, Winograd added.

    “We haven’t annualized fully the impact on the business system of all that new distribution,” he said.

    However, at some point, he said, “people will respond in ways that we won’t choose to or be able to compete with and the market share will level off. Where that is, is very hard for us to estimate.”

    “Business is moving around, players have exited or reduced their level of aggressiveness in the market, and new players are entering,” Grier said. “So, part of this is that there is just a big shakeup, and I’m not sure how long this will continue.”

    Originally Posted at National Underwriter on August 5, 2010 by Katharine Rose.

    Categories: Industry Articles
    currency