Ruark Consulting

Tim Paris, FSA, MAAA will be a presenter at the SOA 2012 Life & Annuity Symposium, Session #048 “Hot Topics for the Smaller Insurance Company”, at 8am on May 22, 2012.

Join your fellow smaller company practitioners to share stories about 2011 and ideas for the remainder of 2012 and beyond. Discussion will range from the impact of the existing economic environment to the latest product development issues to planning for impending future changes. Discussion will also include any relevant topics that the participants want to discuss. 

At the conclusion of the session, participants will be able to:

Steve Wright, FSA, is a Senior Consultant & Actuary at Ruark Consulting and he will be speaking at the SOA 2012 Life and Annuity Symposium on May 20 -22nd

He will be presenting at the Session # 16PD at 10am on Monday May 21^st.

The title of his session is: “Best Practices for using VBA in Excel”.

Steve’s unique VBA programming skillset and his expertise as an actuary give him an excellent platform to speak to other actuaries about the opportunities presented by programming in VBA as well as how to save time and avoid pitfalls by adhering to best practices.

Tim Paris, FSA, MAAA discusses the threat of longevity risk to writers of annuity living benefit guarantees, and how longevity reinsurance can be used to mitigate this risk.

Due to strong demand and rapid growth of our other policyholder behavior experience studies, in 2012 Ruark Consulting will be offering a GMIB Annuitization study for the first time.

Anticipated analysis for Variable Annuity GMIB Annuitization Study

Results split by various factors, including:

• Duration since waiting period
• Age
• Distribution channel
• In-the-moneyness levels
• Qualified status
• Policy size
• Calendar quarter

If you would like to learn more about these opportunities, please contact:

Ruark Consulting is continuing to study policy beholder behavior for variable annuity writers. This will be the third year we will conduct this particular study. Our 2011 study included the following elements.

Data from twelve insurance companies
Time period Jan 2007 – April 2011, restricted to completed policy years
5 million contract years of exposure
Partial withdrawal utilization expressed by Count
Partial withdrawal amount expressed as % of relevant Benefit Base and as % of Account Value.  For Benefit Base, also expressed as relative to the maximum allowable withdrawal (less than maximum, maximum, greater than maximum)

Our 2012 Variable Annuity Mortality study will be the first update to our 2007 study.  Our original study proved very insightful and served as the foundation for our Ruark Mortality table.

Data provided from 13 insurance companies.
Study covers experience in calendar years 2005-2006
Mortality analysis results compared to the 94 MGDB and the A2000 tables.
10 pages of commentary and 8 pages of methodology

Results are portrayed in 36 Tables and 18 Charts along the following categories:

1. Male, Female, Total in 5 year bands – (0-49, 50-54, 55-59,60-64 etc. thru 90+)

Ruark Consulting has been performing the Surrender Study annually since 2008. It continues to be a valuable tool for study participants to better understand policyholder behavior. Our 2011 study included the following:

Data from twelve insurance companies
Time period Jan 2007 – March 2010
22.5 million contract years of exposure; 1.5 million surrenders
Results by count and amount

14 pages of commentary and methodology
49 tables of results
29 graphs of results

Tables of results:

1)      Duration, by surrender charge period of the product

2)      Years Remaining in Surrender Charge Period

This month’s Retirement Income Journal features the article “Mind the Longevity Gap!” by Tim Paris, which describes how to use reinsurance to mitigate the enormous longevity risk implicit in living benefit guarantees for variable and indexed annuities.

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The March 2012 newsletter of the Society of Actuaries’ Reinsurance Section has a cover story titled “A Snapshot of Large-Retention Companies’ Reinsurance Needs”.  Authored by Ronald Klein, it addresses how life reinsurance can stay relevant in an era of declining cessions from direct writers to life reinsurers.  One particularly succinct quote is:

“Larger life or multi-line insurance companies no longer need traditional quota-share reinsurance, and excess (above large retention limits) reinsurance is not appealing to reinsurers.  The solution is for reinsurers to begin adopting a non-life reinsurance product offering.  Products such as Stop Loss and Catastrophe covers can really assist large-retention insurers to manage their earnings and protect their balance sheets.”

 

While effective hedging of investment risks has rightly been the focus of variable annuity companies for the last few years, the enormous longevity risk implicit in living benefit guarantees has gone largely unnoticed and unmanaged.  This longevity risk is due to the fact that if and when living benefit guarantee claims are triggered, they typically take the simple form of a life annuity.  While this helps retirees mitigate the risk of outliving their assets, variable annuity companies risk that long-term increases in human longevity will outpace the level of longevity priced into the living benefit guarantee.  Three facts exacerbate this risk:

One of the primary objectives of variable annuity companies is to stabilize, grow, and protect their asset-based revenue stream.  The provision of complex guarantee features to policyholders poses a major challenge to this objective.  While variable annuity companies have implemented sophisticated hedging programs in an effort to mitigate the investment risks associated with these guarantees, the variability of policyholder mortality and behavior result in a moving target for hedging programs and exposes companies to losses that can overwhelm the asset-based revenues.  We think that this risk is totally unnecessary and can be mitigated with appropriately structured reinsurance that complements the hedging program.

Accurate understanding of the level, shape, and variations of variable annuity mortality is vital for product pricing, effective management of hedging programs that operate based on specific assumptions for mortality and policyholder behavior, and as an efficient basis for pure mortality reinsurance programs.  However, based on our experience over the last decade, standard annuity mortality tables fail to capture the dynamics of variable annuity mortality.

To fill this void, we developed a new standard – the Ruark Mortality Table, based on an industry experience study of thirteen variable annuity companies with 2.5 million exposure years and 49,000 reported deaths.  The following graph illustrates how the Ruark Mortality Table differs from some standard annuity mortality tables for selected male ages.

Maria Wood has published an article in LifeHealthPro entitled “Variable Annuity Holders Hold Tight in Recession“. It is another article based on Ruark Consulting’s Variable Annuity Policyholder Behavior Studies.

Her prior article entitled “Fixed Indexed Annuity Holders Keep Holding On” cited similar findings in Ruark Consulting’s Fixed Indexed Annuity Policyholder Behavior Studies.

If you’d like to know more about these studies or would like to request the Executive Summary, please contact Rich Tucker

Tim has written a white paper entitled “Modern Variable Annuity Risk Management”, which can be downloaded here.

The paper describes the three key risks facing modern variable annuity companies — investment risk, insurance risk, and policyholder behavior risk — and how the Ruark Companies are uniquely positioned to help our clients develop and maintain integrated solutions to these risks.  In particular, mortality in the accumulation phase and longevity in the guaranteed living benefit payout phase are large yet under-appreciated risks in the industry that prudently structured (and available!) reinsurance can mitigate.  And regular installments of our industry-leading experience studies of policyholder behavior provide the profound and detailed insights that variable annuity companies need to effectively manage this risk.

Never before has the internet been such a dangerous place for the uninitiated surfer. It seems today more than ever before, a perilous site waits just around the corner ready to bombard the innocent user with everything from viruses to malware or inappropriate adult images and/or content. Even with a safe and reputable web browser, a good firewall and virus and malware/spyware tools installed, in our homes the internet remains a perilous place.

FOR IMMEDIATE RELEASE

Variable Annuity Policyholder Behavior Studies Indicate Decline in Surrenders

SIMSBURY, CT/March 5, 2012 – Ruark Consulting LLC, a Connecticut actuarial consulting firm, has released the 2011 updates to its Variable Annuity Policyholder Behavior Studies.  The 2011 updates provide essential information to insurance company risk managers, enabling them to incorporate recent experience into their product pricing and reserve modeling.  Key findings include:

• Industry surrender rates declined by more than half during the onset of the economic recession and have not returned to prior levels.

Fixed annuity and indexed annuity reinsurance is a market where Ruark Insurance Advisors has significant experience, along with variable annuities and life insurance.  This article reviews the basic parameters that a direct writer should understand in order to evaluate the applicability of fixed and indexed annuity reinsurance to their situation.

Annuity reinsurance is a tool to manage required capital, surplus strain and a company’s balance between asset risks and insurance risks.  Limiting sales volumes can achieve similar results but may conflict with strategic needs to maintain or grow sales volumes and to enhance relationships with distributors.

Insurance companies have always performed experience studies, but the needs for these studies have increased dramatically and will continue to do so.  Product designs have become more complicated.  Principle based reserves and required capital require significant knowledge of historical experience in order to establish appropriate assumptions.

Experience studies must satisfy the following criteria to be of maximum value:

• Reliable data
• Sufficient volume of data
• Retain value of business information
• Detailed breakdowns to see trends
• Analysis and understanding
• Availability of internal staff
• Timeliness

Ruark Consulting is gearing up for the 2012 versions of our Variable Annuity Policyholder Behavior Studies including the following studies:

Variable Annuity Mortality (Details of 2007 2tudy)

The Mortality Study will add five years of data to our previous study.  During this time, living benefits have increased in popularity and equity market corrections have created deep in-the-money values for guaranteed benefits.  Experience will be analyzed by type of living benefit and death benefit.  The potential for anti-selection according to in-the-moneyness levels will be explored.  Mortality improvements over time will be analyzed.  And the Ruark Mortality Table will be updated.

SIMSBURY, CT/January 5, 2012 – Ruark Consulting LLC, a Connecticut-based actuarial consulting firm, has completed its 2011 Fixed Indexed Annuity Surrender Study.  This ground-breaking study includes unprecedented detail on the impact of various product features on policy persistency, which is invaluable for insurance companies to manage risk and design appropriate products.

Key findings include:

• Persistency rates improved significantly over the timeframe of the study, which was 2006 through 2010.

• Policies with guaranteed living benefits exhibit better persistency than those without such benefits.  Living benefits are popular with consumers, with the majority of new purchases including them.

The Executive Summary of Ruark Consulting’s 2010 variable annuity experience studies is now available.  Highlights are presented for the 2010 Variable Annuity Surrender Study and the 2010 Variable Annuity Benefit Utilization Study.

Print or Download PDF Below.

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Reinsurance programs in the annuity and life insurance market are common and are intended to provide value to both the Ceding Company and the Reinsurer.  The negotiation and placement of reinsurance programs receive significant and high level staff commitments.  Thereafter, ongoing administration will affect the coverage and value of the reinsurance program.  There are common administrative pitfalls that will impact the value of a reinsurance program if not tended to with proper care.  Ruark Consulting has the experience and capabilities to avoid these administrative pitfalls.

Superior reinsurance administration should address the following:

Darla Mercado has published an article in InvestmentNews.com entitled “VA Clients Hold on to their VA’s Instead of Surrendering Them”.  It is based on the results of Ruark Consulting’s most recent Variable Annuity Policyholder Behavior Study.

The article can be viewed at:

VA Clients Hold on to their VA’s Instead of Surrender Them 

Elizabeth Festa of National Underwriter had an article in the January 2012 edition entitled “Policyholders Getting Smarter, Leading to Charges for VA Products, Says Moody’s”.  An excerpt from this article is:

In pricing and hedging the risks of their VA contracts, companies must also make assumptions about how many customers will hold on to their policies long enough to be eligible for benefit, how many of them will exercise guaranteed benefit options when they become available and how many more of them may exercise those options, the report explains.

Jack Marrion’s Index Compendium for February 2012 includes a reference to Ruark Consulting’s recently completed Fixed Indexed Annuity Surrender Study, as follows:

Index Annuity Surrenders Sharply Down

“Based on data from carriers representing 80% of industry sales, a new study published by Ruark Consulting (www.ruarkonline.com) finds that surrenders of index annuity contracts declined significantly from 2006 to 2010.  Ruark believes this to be due to less competitive alternatives, use of GLWB’s and greater suitability standards.  The Ruark study confirms predictions made by Advantage Compendium in 2008 that annuity exchanges would decline due to annuity lifetime benefits and tightened compliance.”

Maria Wood has published an article in LifeHealthPro (which I still think of as National Underwriter) entitled “Fixed Indexed Annuity Holders Keep Holding On”.  It is another article based on Ruark Consulting’s Fixed Indexed Annuity Surrender Study.

It can be viewed at:

Fixed Indexed Annuity Holders Keep Holding On

Linda Koco has published an article in AnnuityNews.com entitled “More Policyholders Keeping Their Indexed Annuities”.  It is based on the results from Ruark Consulting’s Fixed Indexed Annuity Surrender Study.

It can be viewed at:

More Policyholders Keeping Their Indexed Annuities

Ruark Consulting is an Event Sponsor at the Equity-Based Insurance Guarantees Conference taking place in Chicago on November 14 & 15, 2011.  Tim Paris is the presenter on November 15 of “Policyholder Behavior Trends, Dynamics & Cohorts for VA’s and IA’s”.

Stop by and see Tim and his associates. More information on the conference can be found at the SOA website at:

SOA Equity-Based Insurance Guarantees Conference

Tim Paris’ presentation at the SOA Annual Meeting on Managing Longevity and Mortality Risks is available here.  Longevity risk is an under-appreciated risk in variable annuity guaranteed living benefits.  Tim welcomes comments and discussion.

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Rich Tucker, Tim Paris and Steve Wright will be attending the 2011 SOA Annual Meeting in Chicago on October 17, 18, and 19.  Let us know if you will also be there.

Tim Paris will be a presenter at session 73 – Managing Longevity and Mortality Risks and Their Global Activities.  The SOA website does not show Tim’s participation, but we know better.

It’s been a very busy year for the RCL dental consulting practice, culminating in a couple of big events this summer. First, the 2010 version of the Dental PPO Network Study was released, and included the largest group of companies the study has ever had. Since then I’ve been kept hopping reviewing the results with companies that participated – thanks to all of you for your interest! On October 19 I will be giving a webinar for the National Association of Dental Plans that will include some highlights of the study results. If you’re interested in that let me know or visit the NADP web site for more details. Meanwhile, I will soon be turning attention to a pilot study that reviews per member utilization rates across the industry. Those companies that provided the data for that study will be hearing more in the next couple of months.

In a previous article (When to Automate) I suggested eight considerations when one is deciding whether to automate a complicated process to improve both efficiency and accuracy. In this article I will summarize a real-life project where we used automation to achieve those goals. My hope is that you can identify processes in your own company that could similarly benefit from automation.

One of Ruark Consulting’s businesses is the administration of reinsurance treaties between insurance companies.  This involves receiving very large tables of data from one company, performing extensive calculations, and creating large tables of data to be sent to the other party.  The steps involved in this process are indicative of the issues to be dealt with in any automation process.

We’ve all been there: we start out with a simple Excel or Access routine and before long it morphs into a complicated process involving many calculations from many data sources, and possibly involving many people in many physical locations. If you’re anything like me, you’ve had these thoughts come up:

• I wish I could hand this process off to someone else, but the steps involved are too complicated to explain.
• My team is spending way too much time on these routine procedures. I wish they could spend more of their time applying their expertise to their current work and to other projects that need to be addressed.

Ruark Insurance Advisors has the capability to help our clients structure, price and place life reinsurance Aggregate Stop Loss programs.  We use our stochastic mortality model to evaluate the mortality fluctuation risk of your business.  From this analysis, the Attachment Point and Claim Limit can be chosen to provide the risk coverage desired, at the price acceptable to the Ceding Company.  Ruark Insurance Advisors then places the reinsurance program with reinsurers acceptable to the Ceding Company.

A more detailed description of these programs can be found in the PDF download below

Rich Tucker and Tim Paris’ article entitled “State of the Variable Annuity Reinsurance Market” has been reproduced in the January 2011 newsletter of the Society of Actuaries Reinsurance Section.  The newsletter can be found at:

Reinsurance News January 2011

Tim Paris will be a presenter at the SOA Investment Symposium on April 11-12, 2011 in New York City, as part of the session “Variable Annuities – 24 Months Later”.  Tim will be addressing the topic of variable annuity policyholder behavior during the financial crisis.

Tim will also be a presenter at the Insights into the Pricing of Policyholder-Related Assumptions Seminar on May 18, 2011 in New Orleans, where he will also be addressing variable annuity policyholder behavior.

The Society of Actuaries has released the 2010 VA Policyholder Behavior in the Tail survey results for VA guaranteed benefits.  This survey is conducted annually by the Joint Risk Management Section to assist the industry in developing better estimates of policyholder behavior in the tail.  Rich Tucker is a member of this Working Group.  The report can be found at:

2010 VA Policyholder Behavior in the Tail Survey Results

Ruark Consulting will conduct the industry’s first aggregate surrender study for indexed annuity products.  Eight companies are currently expected to participate, including most of the major indexed annuity writers.  Participating companies will benefit from the extensive analysis of their own data, aggregation of results across the industry, and ability to compare their own results to the aggregate.

The indexed annuity surrender study is an extension of Ruark Consulting’s ground-breaking variable annuity experience studies.  Analysis is detailed enough to be helpful when establishing assumptions used in financial modeling.  Companies utilize these models to establish appropriate pricing, reserves, and capital.  The analysis will include the impact caused by living benefit riders, distribution channel, product bonuses, time period, duration, age, and policy size.

Jan Soppe of Strategic Health Management authored an article in the October 2010 issue of Life Insurance Selling that discussed the path to success for Combo products, addressing annuity & long term care combos as well as life insurance & critical illness combos.

The article can be accessed here: Combo Products: Where is the Path from Potential to Reality

Ruark Consulting works with Strategic Health Management to provide the necessary combo product expertise to our clients, naturally aligning our annuity and life insurance knowledge with Strategic Health Management’s long term care and critical illness knowledge.  Let us know if you’d like an introduction to Jan and her colleagues.

2011 is starting off with a bang for the RCL dental practice, as I have plans for three industry studies during the year. First is the ever popular PPO Network Study. This will look and function much as it has in past years. I am expecting largely the same group of participating companies, with some exciting new additions. Details of the data request and timing will go out this week.

Tamiko Toland of Annuity Insight has issued an analysis called “Shifting Risk: Hints of Reinsurance Resuscitation”. She discusses the evolving state of the variable annuity reinsurance marketplace. Ruark Consulting’s article “State of the Variable Annuity Reinsurance Market in 2010” is referenced. Rich Tucker is quoted as “I think insurance companies had forgotten that reinsurance is another tool because supply has been very difficult to come by. It’s still not cheap and it’s not able to fulfill all the risk management demands of the industry (not even majority at this point), but why not blend it in as a second risk management strategy when it is available?”

A few months ago, I completed RCL’s sixth annual DPPO Network Study. The study looks at network value – from discounts and network usage – across the industry based on claims from almost 20 carriers. After pulling together specific reports for each company participating in the study, I stepped back to take a look at the broader picture of developments across the industry and nationally with dental networks.

I’ve just returned from Seattle, where I attended the National Association of Dental Plans’ very successful CONVERGE conference. I’ve been to several NADP conferences now, and think they do a great job lining up a variety of interesting speakers and topics. Maybe I’m biased because I was a speaker – but I enjoyed other sessions and believe I’d make that statement anyway! The extremely high attendence this year also backs me up. The NADP staff also did a great job handling the logistics with such a large crowd; everything seemed to go off without a hitch.

I am very excited to be presenting two workshop sessions at the National Association of Dental Plans’ annual CONVERGE conference, in Seattle September 20 – 23, 2010. In “Drilling Out from the Recession: Has the Economy Had an Impact on Dental Claims?” on Tuesday the 21st at 10:30, I will discuss how utilization and cost patterns changed in 2008 and 2009 as the recession took hold. This topic has been of great interest to all dental carriers for the last two years, and I’ve found both noteworthy common patterns and interesting variations among companies’ experiences.

Reinsurance for variable annuity guarantees (VA GMxBs) has often been characterized as unavailable over the last few years. In fact, this is not the case. Reinsurance is available, but the terms required by reinsurers are often inconsistent with the pricing of direct writers. Success with VA reinsurance requires an understanding of the critical reinsurance design points discussed below.

Work is well underway on the latest update to RCL’s annual Dental PPO Network Study, the only tool in the industry providing carriers with competitive benchmarks. The study measures in-network discounts, network utilization rates, and overall network savings from the combination of the two (effective discounts). When the study is complete, I will also publish an update on national discounts and trends in networks over the past few years, looking at such questions as whether networks are still growing while also increasing discounts, and whether plan designs continue to increase incentives for patients to use a network dentist.

I recently read the perfect book for a quiet actuary managing a consulting practice, and wrote a review published here by the SOA. The book is by Nancy Ancowitz, a business communication coach I have worked with over the past few years, and like all of her work it is insightful and useful. An introvert herself, Nancy has a great perspective on how we think and how we work with those chatty extroverts. Far from everyone I work with is an introvert -even the actuaries!. But since we’re half of the population some must be, and might find this useful. Take a look – and let me know what you think.

Ruark Consulting has released our major benchmark Variable Annuity Benefit Utilization Study.  Please view the press release below for additional information.

Variable Annuity Benefit Utilization Study (Press Release)

The media has shown interest in the Variable Annuity Benefit Utilization Study.  Noteworthy articles include:

National Underwriter

Rich Tucker was quoted in a Bloomberg News article, dated January 8, 2010, that discussed the emergence of Athene Life Re as a reinsurer focused exclusively on fixed annuities.   A link to this article in Business Week follows.

Black’s Apollo Targets Fixed Annuities With Bermuda Reinsurer

The high capital requirements of traditional fixed and fixed indexed annuities must be managed carefully.  Reinsurance is a major management tool.  Inforce blocks of business can be reinsured to manage current capital levels.  Apply reinsurance to new business to manage to your desired capital levels on an ongoing basis.  Instead of restraining sales to manage capital levels, reinsurance allows you to continue to support your distribution channels by allowing them to sell the volume of new business desired and providing them with the variety of products needed.  The insurance company can diversify their accumulation business among traditional fixed, indexed, and variable annuities.

Methodology
For the Variable Annuity Benefit Utilization Study that we released in December 2009, RCL used the classical Limited Fluctuation (LF) credibility method. We believe that this method is reasonable for this purpose, as it reflects both withdrawal frequency and severity and is computationally straightforward. In this context, severity measures the amount of a withdrawal in relation to a guaranteed Benefit Base.

The LF method utilizes the Central Limit Theorem, and assumes that withdrawal frequency and severity are independent, and that withdrawals are mutually independent. RCL believes that these assumptions are reasonable for this study, and that investors’ regular review of their financial plans and product performance with their financial advisor tend to mitigate the potential dependency effects of systematic withdrawal programs from year to year.

 
Credibility theory often utilizes the following basic formula to calculate a credibility-weighted estimate:

Estimate = Z * [Mean of current observation] + (1-Z) * [Prior mean],

where 0<=Z<=1.

Z is the credibility ascribed to the mean of the current observation.  The prior mean may be based on prior observed data or some type of benchmark.  The question is – how do we determine Z?

Three approaches are commonly used:

 
As actuaries, we are quite familiar with the rigorous use of double dots and bars in mathematical symbols and equations, and we often use software packages that facilitate their rendering in electronic documents.  However, it is sometimes tempting to ignore such diacritical marks when using foreign words or names in English.  This is particularly true for electronic documents — I see the tilde and circumflex on the keyboard, but how do I put it over the letter?
 
Of course, computer keyboard settings can be adjusted to accommodate non-English characters, and certain font settings also display as some of these characters.  But as a shortcut, it is useful to know that many of these characters can be produced by simply using the ALT key and a four digit code on the number keypad in the course of your normal typing.  For example, you need ALT-0252 to properly type “the Bühlmann credibility factor approaches one asymptotically”, and ALT-0244 for “Itô’s Lemma is used in the derivation of the Black-Scholes option pricing formula”.
 
You can find reference materials and other codes with an internet search on “diacriticals” or “international symbols”.  But be warned — those with a certain musical affinity and/or blatant disregard for the appropriate use of diacriticals may find some combinations difficult.  For example, in spite of our best efforts, we have been unable to code the dotless i or umlaut n as parodied in the movie “This is Spinal Tap”, which is troubling.  Then again, in the immortal words of the great David St. Hubbins, “It’s such a fine line between stupid and clever”.

Credibility Theory is a branch of actuarial science that attempts to determine the extent to which data can be trusted to inform estimates of the future.While the concept of credibility is often associated with casualty actuaries, it is relevant to virtually all fields of actuarial endeavor.The academic literature on this subject is extensive, and includes several different approaches with a range of mathematical sophistication.

Poetry is foundational to the history of RCL/RIA, so in celebration of our new website we have penned the following haiku:

behold! new website
RCL wisdom profound…
clients’ contentment

RCL has completed its fifth annual Dental PPO Network Study, analyzing the value of networks for all major carriers in the dental insurance industry. This year’s study shows that discounts in dental preferred provider networks, the most popular type of plan sold, increased in 2008 after an unusual decrease in 2007. The number of dentists participating in the average network also continues to increase, although no longer at the extremely fast rate seen last year.

Ruark Insurance Advisors (RIA)

RIA was founded in 1998 by our president, Tim Ruark.  Tim recognized that the equity-based product market was underserved in terms of financial management capacity.   He decided to work towards creating more capacity, while at the same time influencing the design of products to better manage the underlying financial risks.

RIA specializes in designing and implementing risk management solutions for the annuity product marketplace.  Our expertise in product design, risk analysis, reserve valuations, and risk transfer related to the guaranteed benefits in variable annuity products, the indexed benefits under equity indexed annuities, and capital relief for fixed annuities can help you bring products to market faster and better manage the underlying risks.

Ruark Insurance Advisors, Inc. (RIA) specializes in the design and risk management of ancillary product features such as Guaranteed Minimum Death Benefits, Earnings Enhancement Benefits, Guaranteed Minimum Income Benefits, Guaranteed Minimum Withdrawal Benefits, Guaranteed Minimum Account Value Benefits, and Guaranteed Payout Annuity Floors.

Many of our unique reinsurance programs are tailored specifically to the variable market.   One example is the Deferred Stop Loss program (DSL) for which a patent is pending.  This program recognizes the long-term nature of the guaranteed minimum death benefits, the inherent volatility of the equity markets, and the need for direct writers to avoid large fluctuations in earnings.

Negotiation has been a critical skill for me for most of my career. I’ve worked as a product actuary, represented a major distributor, and now I’m a reinsurance intermediary.
Technical actuarial skills were never my strength. However, I’m often able to get parties with differing goals to find a common ground, enabling a project to be completed to everyone’s satisfaction. The parties may not, and if fact should not, end up feeling like the sole winner, but they don’t come out feeling like a loser either.

There are common tactics I’ve used in my negotiations. They are:

RCL teamed up with The Ignition Group to demonstrate how dental PPO companies can optimize their network development using the competitive data from our two companies. The Ignition Group provides dental insurers with data on how their network’s participating dentists match up to competitors’, and RCL provides data on how the discounts in those networks compare.  The workshop used actual data from several markets as case studies to show exactly how a company can figure out their strengths and weaknesses and develop a plan for improvement.

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Early in the life cycle of indexed annuity living benefits, Rich Tucker presents pricing considerations and reinsurance alternatives for GMWB.  Originally in our July 2007 newsletter.

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As capital market hedging programs were becoming popular for variable annuity guarantees, Rich Tucker summarizes the execution risks that need to be recognized when developing such a program.  Originally presented in our July 2007 newsletter.

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In September 2006, Ruth Ann discusses the enhancements in the second Dental PPO Network Study, and other activities in RCL’s Dental Practice.

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From our September 2006 newsletter, Inger Harrington presents an early discussion on what to consider when selecting lapse assumptions for GMDB.

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As the industry moves towards principle based reserves and capital, Peter Gourley discusses how this should be incorporated into
variable annuity product pricing. Originally appeared in our September 2006 newsletter.

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Mike Loftus reviews early mortality experience on variable annuity GMDB’s.  Originally published in our March 2006 newsletter.

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Ruth Ann Woodley followed up her Dental PPO Network Survey with a new project surveying Administrative Services Only (ASO) fees for Dental PPO Insurers and TPA’s.  Originally published in our March 2006 newsletter.

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I am addicted to the New York Times, especially the magazines. I love looking at the ads for expensive things I would never buy, and pictures of Rockefeller descendents more dressed up for their 10th benefit this month than I will be in my whole life. So I couldn’t resist this Samurai Shopper column on my other big interest – dental care. Little did I realize how much I had to learn about the world of high fashion teeth! It completely blew my mind, and I thought I knew everything that mattered about brushing and flossing.

From the October 2005 newsletter, Tim Ruark addresses practical implications as C-3 Phase II was about to be implemented.

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RCL distributed results for our first Dental PPO Network Survey.  The survey represents a major landmark for Ruark Consulting, and also for the dental insurance industry. It is the first study ever done comparing dental PPO in-network discounts across the industry.  Originally presented in our October 2005 newsletter.

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Ruark Insurance Advisors has always practiced full disclosure of its brokerage compensation, long before it was fashionable.

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This article by Rich Tucker in the 2005 newsletter describes how the risk attributes of variable annuity guarantees and indexed annuities act in opposite directions.  Hence, managing the risks in aggregate is more efficient than managing each individually.

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Has it really been 10 years since I authored the epic “Variable Annuity Guaranteed Minimum Death Benefit” – The Movie, in Contingencies Magazine? [I don’t care if youdon’t remember, my mom considers it an epic, so it’s an epic.] And what prophecy – so many of us have in fact vacated the offices mentioned therein: “There are two kinds of actuaries: those whose careers will end due to the GMDB, and those who’ll move into their offices.” And to prove timing is everything with comedy, that article was listed as “Humor”, but a few years later, I guess it wasn’t so funny.

So, ten years later, what is new with GMDB?  Well, consider that only a few people have  been involved in VA guarantees over the last decade, and I’m one of them. More  important, they asked me to write this article. So, now the reader will tolerate my views on three aspects of GMDB – the retail product, the reinsurance players, and the reinsurance techniques. By reading this article, you will be revered at actuarial cocktail parties, and I shouldn’t have to tell you how important that is.

Originally from our February 2005 newsletter, Tim Ruark contributes ways to improve VA risk modeling.

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Rich Tucker discusses the different ways to select an arbitration panel in a reinsurance treaty.  Originally appeared in our February 2005 newsletter.

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