Wall St blames turmoil on insurers’ volatility strategy
February 14, 2018 by Alistair Gray and Robin Wigglesworth
Wall Street is pointing the finger at insurance companies as an unlikely but pivotal source of the turbulence that wiped trillions of dollars off stock market values in recent days.
While complex volatility-linked funds and algorithmic traders have been widely blamed for the wild price swings, strategists and investors said a significant portion of the selling could be traced to variable annuities, a popular tax-advantaged insurance-company product that offers customers guaranteed returns.
US life insurers suffered losses on variable annuities in the financial crisis. Since then, insurers have responded by marketing variable annuities that put customers’ money into “managed volatility” funds.
Click HERE to read the full story via Financial Times.