annuity product trends and issues · annuity september 2013 • allianz life introduces index...

Session 160 PD - Annuity Product Trends and Issues

Moderator:

Trevor D. Huseman, FSA, MAAA

Presenters: Nicholas E. Carbo, FSA, MAAA

Matthew R. Coleman, FSA, MAAA Aatman Naresh Dattani

SOA Antitrust Compliance Guidelines SOA Presentation Disclaimer

http://www.soa.org/legal/antitrust-disclaimer/

https://www.soa.org/legal/presentation-disclaimer/

2017 SOA Annual Meeting & Exhibit

Moderator: Trevor Huseman, FSA, MAAA

Presenters: Aatman DattaniNicholas Carbo, FSA, MAAAMatthew Coleman, FSA, MAAA

Session 160 – Annuity Product Trends and Issues

October 18, 2017

SOCIETY OF ACTUARIESAntitrust Compliance Guidelines

Active participation in the Society of Actuaries is an important aspect of membership. While the positive contributions of professional societies and associations are well-recognized and encouraged, association activities are vulnerable to close antitrust scrutiny. By their very nature, associations bring together industry competitors and other market participants.

The United States antitrust laws aim to protect consumers by preserving the free economy and prohibiting anti-competitive business practices; they promote competition. There are both state and federal antitrust laws, although state antitrust laws closely follow federal law. The Sherman Act, is the primary U.S. antitrust law pertaining to association activities. The Sherman Act prohibits every contract, combination or conspiracy that places an unreasonable restraint on trade. There are, however, some activities that are illegal under all circumstances, such as price fixing, market allocation and collusive bidding.

There is no safe harbor under the antitrust law for professional association activities. Therefore, association meeting participants should refrain from discussing any activity that could potentially be construed as having an anti-competitive effect. Discussions relating to product or service pricing, market allocations, membership restrictions, product standardization or other conditions on trade could arguably be perceived as a restraint on trade and may expose the SOA and its members to antitrust enforcement procedures.

While participating in all SOA in person meetings, webinars, teleconferences or side discussions, you should avoid discussing competitively sensitive information with competitors and follow these guidelines:

• Do not discuss prices for services or products or anything else that might affect prices• Do not discuss what you or other entities plan to do in a particular geographic or product markets or with particular customers.• Do not speak on behalf of the SOA or any of its committees unless specifically authorized to do so.

• Do leave a meeting where any anticompetitive pricing or market allocation discussion occurs.• Do alert SOA staff and/or legal counsel to any concerning discussions• Do consult with legal counsel before raising any matter or making a statement that may involve competitively sensitive information.

Adherence to these guidelines involves not only avoidance of antitrust violations, but avoidance of behavior which might be so construed. These guidelines only provide an overview of prohibited activities. SOA legal counsel reviews meeting agenda and materials as deemed appropriate and any discussion that departs from the formal agenda should be scrutinized carefully. Antitrust compliance is everyone’s responsibility; however, please seek legal counsel if you have any questions or concerns.

2

Presentation Disclaimer

Presentations are intended for educational purposes only and do not replace independent professional judgment. Statements of fact and opinions expressed are those of the participants individually and, unless expressly stated to the contrary, are not the opinion or position of the Society of Actuaries, its cosponsors or its committees. The Society of Actuaries does not endorse or approve, and assumes no responsibility for, the content, accuracy or completeness of the information presented. Attendees should note that the sessions are audio-recorded and may be published in various media, including print, audio and video formats without further notice.

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© Oliver Wyman

Annuity Product Development TrendsFixed Index Annuities & Registered Fixed Index Annuities2017 Society of Actuaries Annual Meeting

Boston, October 18, 2017

Nicholas Carbo, FSA, MAAA

1© Oliver Wyman

Agenda

1 FIA market update

2 RFIA market update

2© Oliver Wyman

6.5

11.7 12.7

22.4

26.5 25.3 25.226.8

30.132.3 32.4

34.1

38.7

46.9

53.1

58.255.1

0

10

20

30

40

50

60

70

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Q2

Fixed indexed annuity sales trends (2001-2017)2017 FIA sales are on track to drop 5% vs 2016 based on Q2 2017 sales

Source: Wink’s Sales & Market Report1Q2 2017 sales were multiplied by two to get a 2017 annualized result

$ B

illio

ns

YTD Q2 20171

(Annualized)

15.7% CAGR (2001 -2016)

3© Oliver Wyman

Recent acquisitions reshaped the FIA marketAcquirer/Seller (date)

Transaction type: IPO Japanese insurers Alternative buyers

2010 2011 2012 2013 2014 2015 2016 2017

4© Oliver Wyman

Crediting methods and indicesTerm end point and hybrid indices continue to be strong in the FIA market

Crediting methods (Q2 YTD 2017) Indices (Q2 YTD 2017)

Annual point-to-point crediting method and S&P 500 index are still the most common, but “hybrid” and proprietary indices (e.g., target volatility and dynamic rebalancing indices) are gaining significant traction

Source: Wink’s Sales & Market Report

Term End Point (TEP),

14.3%

Annual Point-to-Point (A-

PTP), 49.2%

Daily / Monthly

Averaging (AVG), 6.5%

Monthly Point-to-Point

(M-PTP), 11.3%

Fixed, 14.4%

Other, 4.3%

S&P 500, 51.2%

NASDAQ-100, 1.5%

Russell 2000, 1.0%

Other public indices, 1.1%

Hybrid Indices, 28.6%

Rainbow / Multi-Index,

0.7%

Fixed, 14.4%Other, 1.5%

5© Oliver Wyman

FIA rider trendsGLWBs continue to be the main driver of sales, with other secondary differentiating features

• “Stacked” rollups (e.g. 4% + account value performance)

• Account value driving income

• Income increases after income start

• Rollups are compound / simple / or absent (e.g., vary income by age / duration)

• More income options (flat, guaranteed increase or index-linked increases)

• Offered for free or additional charge (e.g. 10 bps)

• Typically doubles the income for up to 5 years if cannot perform 2 of 6 ADLs

• Offered with or without GLWB (sometimes for an additional charge)

• Maximum payout

• Payout periods / reduced lump sum

GLWB INDEX-LINKED

INCOME GROWTH

OTHER GLWB

STRUCTURES

NURSING HOME INCOME

RIDERS

ENHANCED DEATH

BENEFITS

6© Oliver Wyman

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017

December 2015

• Midland National– MNL Prosper 5

Fee-based FIA product launchesHalf of FIA writers have or plan to introduce a fee-based FIA in 2017, according to LIMRA

August 2016

• Great American– Index Protector 7

February 2017

• Allianz– Retirement

Foundation ADV Annuity

February 2017

• Lincoln– Lincoln Core Capital

May 2017

• Pacific Life– Pacific Index Advisory

July 2017

• Symetra– Advisory Edge– Income Advisory Edge

July 2017

• Nationwide– Nationwide Summit

7© Oliver Wyman

• The customer will likely receive a higher cap rate• The surrender charges will likely be lower or eliminated

• The company will not be paying an upfront commission, resulting in less strain to the insurance company

• Agents that only sell fee-based may be willing to look at FIA as a choice for their customers

• The uncertainty around the DOL fiduciary rule may increase demand for these products

Higher customer value

Less strain to insurer

Market opportunity

Benefits of fee-based FIAsThe removal of compensation from the product allows for benefits to the customer and insurance company

8© Oliver Wyman

Registered fixed index annuity product launchesProduct launches are accelerating recently with top competitors launching version 2.0 of their products

2010 2011 2012 2013 2014 2015 2016 2017

Oct 2010• AXA introduces

Structured Capital Strategies

May 2013• Metlife introduces

Shield Level Selector

August 2013• CUNA introduces

Member’s Zone Annuity

September 2013• Allianz Life

introduces Index Advantage

January 2015• Voya introduces

Potential Plus

October 2015• Voya closes

Potential Plus

August 2017• Brighthouse

introduces Shield Level Select Access (Fee Only)

August 2016• CUNA introduces

Member’s Horizon Annuity

Feb 2017• AXA Structured

Capital Strategies Plus filed

In addition, Great West and Great American have filed prospectuses for

RFIA products

9© Oliver Wyman

Quarterly RFIA sales (2011Q3 – 2017Q1)Annualized RFIA sales are approaching $8BN

1.0

2.0

0.0

1.5

0.5

Qua

rter

ly P

rem

ium

($ B

N)

+68%

2017projected

201620152014201320122011AXAAllianz Met

Source: Morningstar

10© Oliver Wyman

Motivations for introducing RFIAs

Capital requirements• Diversification with VA• Principles-based Market demand

• Growing sales• Accumulation story

Innovation• Higher cap rates • New product segment

Risk management• Diversification with VA• Low interest rates

∆

11© Oliver Wyman

Key takeaways

1 FIAs have become a mature market

2 Future of fee-based FIA

3 RFIA growth

Session Q&A

willistowerswatson.com

US Department of Labor’s

Conflict of Interest Rule

October 2017

© 2017 Willis Towers Watson. All rights reserved.


Hmmm…

1© 2017 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Wa tson client use only.


Definition

Fiduciaryfi·du·cia·ry | fə-ˈdü-shə-rē

noun (pl) -aries

one who obligates himself or herself to act on behalf of another (as in managing money or property) and assumes a duty to act in good faith and with care, candor, and loyalty in fulfilling the obligation.

adjective

of, relating to, or involving a confidence or trust in a guardian acting in his fiduciary capacity.

From Merriam-Webster.com



““Today, I'm calling on the Department of Labor to update the rules and requirements that retirement advisors put the best interests of their clients above their own financial interests.

– President Barack Obama, February 23, 2015

© 2017 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Wa tson client use only.3

willistowerswatson.com 4© 2017 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Wa tson client use only.

Influential writings explore the mechanics of morality, markets, and capitalism in an industrialized society.

His work Wealth of Nations (1776) lays the foundations of modern capitalism.

Invisible Hand theory: The automatic market force whereby the individual self interests of the participants of a free market drive the supply and demand of goods and services to reach equilibrium.


The World According to Adam Smith

“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” – Adam Smith

Self-interest drives supply, demand and competition.

Competition in the marketplace affects supply, demand and ultimately sets prices at efficient levels.

Much of the financial services industry, especially insurance, has been operating under these free market concepts.

So which is it?



Annuity Regulation for Example

Current Annuity Regulation categories Product requirements (Nonforfeiture) Disclosure requirements (Prospectus, Securities Act of 1933) Seller requirements (Licensure, FINRA, RIA)

Implications Current rules govern the interaction, the seller and the product. Imply that the buyer and seller are acting in their own interests.

Recent Suitability Regulations Suitability requirements – modern fiduciary-lite regulation that requires the seller to consider the interest of the buyer,

generally.



But Do Self Interest Driven Markets Work?Hard to say, but…


Source: Wink Sales and Market Report


Seller or Advisor?

The new DOL Conflict of Interest Rule does not recognize the sale of products as distinct from advice.

The foundational congressional act, ERISA, from which the DOL Rule claims authority, historically applied a 5-part test to distinguish between sales and advice.



Conflict of Interest

con·flict of interest \ˈkän-ˌflikt-\

a conflict between the private interests and the official or professional responsibilities of a person in a position of trust.

a conflict between competing duties (as in an attorney's representation of clients with adverse interests).

first known use of “conflict of interest”:1860.

The central question: Is an insurance agent understood to be an agent of the company she represents, or is she assumed to be “in a position of trust” and thus an agent of the customer?



A Fundamental Change

The Conflict of Interest Rule fundamentally reorients the financial & insurance industries from capitalistic, market-oriented model to a regulation/litigation oriented model.

The capitalistic, market-oriented model recognizes and assumes conflicts of interest are inherent in every interaction. Conflicts of interest are addressed via disclosure and competition. The buyer is primarily the arbiter of their own interest.

A regulation/litigation-oriented model identifies conflicts of interest as problematic.



How the DOL Rule Works

All transactions involving qualified money (especially Fixed, Indexed and Variable Annuities and mutual funds) where commissions are paid, become Prohibited Transactions under the rule.

Prohibited Transactions are subject to IRS tax of 100% of any amount received.

Certain defined Prohibited Transaction Exemptions (PTE’s) allow for commission to be received including PTE 84-24 and the new BICE PTE.

PTE’s under the new rule require either contractual or declarative statements whereby the advisor (or agent) acknowledges fiduciary duty to impartial conduct standards.

These fiduciary standards are principles based and no safe harbor is provided under the rule.

The Department of Labor has no enforcement arm. This rule employs increased legal jeopardy as a means of enforcement.



Impartial Conduct Standards

Effective 6/9/2017 for all qualified transactions.

Provide investment advice that is in the “Best Interest” of the retirement investor. Act with care, skill, prudence and diligence. Act without regard to financial interest of advisor or financial institution. Receive no more than “reasonable compensation.” Make no material misleading statements.

Some believe that the updated requirements for 84-24 which require commission disclosure still apply.

Violations of the fiduciary obligations may lead to: Civil action by the DOL Civil action by the investor Excise taxes by the IRS

Both the DOL and the IRS have stated that during the period prior to 1/1/2018, they will focus on compliance assistance with those who are working diligently and in good faith to comply.



Executive Action

2010: Original Conflict of Interest Rule proposed2011: DOL rescinds rule under significant bipartisan and industry pressure2016 (April): Strengthened Final rule promulgated01/20/2017: Perez resigns & long-time DOL employee, Ed Hugler becomes acting Labor Secretary02/03/2017: President Trump issues Executive Memorandum to Labor Department requesting: Review of impact on retiree access to retirement products Review of impact on increased litigation and associated costs on retirees Review of impact on effect on small business (advisory business)02/16/2017: President Trump nominates Alexander Acosta as Labor Secretary03/01/2017: Hugler proposes 60 day delay to complete Presidential Memo requirements03/03/2017: Acosta declares he will follow the president’s guidance in examining the rule04/07/2017: 60 day delay is final04/10/2017: Original Effective Date of Rule04/26/2017: Secretary of Labor Acosta confirmed06/09/2017: Delayed effective date for Fiduciary Conduct Standards07/01/2017: Nevada shifts from a Suitability Standard to a Fiduciary Standard08/09/2017: DOL Seeks a 18 month delay08/29/2017: OMB approves delay to 07/01/2019



Legal Action

4 Lawsuits have been levied against the DOL. 3 of the 4 have been rejected by the courts.

1. NAFA vs DOL, Washington DC District Court, 11/4/2016 Challenged the rule on numerous grounds. Contended the rule would be catastrophic for FIA’s. Judge found DOL has authority to issue rule. (Nov 2016)

2. Market Synergy vs DOL, Kansas Federal Court, 11/28/2016 Challenged the DOL’s inclusion of FIA’s into the BICE requirements. Judge found that plaintiffs did not prove that DOL failed to follow procedures. (Late 2016)

3. US Chamber of Commerce vs DOL, Texas District Court Challenged the rule on numerous grounds. Contended that one-time transactions should not be burdened with heavy regulation. Judge found DOL has authority to issue rule. (Feb 2017) Appealed to the 5th Circuit. (July 2017) May be first victory for rule opponents. Decision expected later this fall.

4. Thrivent vs. DOL, Minnesota District Court Challenged the rule regarding fraternals ability to require arbitration. DOJ wrote to Judge: “class action provision will likely be mooted in the near future.” (Aug 2017)



Legislative Action

Financial Choice Act of 2017 A revision of similar bill tabled in 2016 Weakens elements of Dodd-Frank Repeals the DOL Rule Passed the US House of Representatives (June 2017) Faces possible filibuster in the Senate

Protecting Advice for Small Savers (PASS) Act of 2017 Passed the US House Financial Services Committee (Oct, 2017) Establishes a best-interest standard for broker-dealers Repeals DOL Fiduciary Rule



Key Takeaways

Financial product sales and regulations have historically been market based.

Capitalistic markets recognizes conflicts of interest and address them via transparency and competition.

The Conflict of Interest rule: Broadens the fiduciary requirement to all sellers of qualified financial products. Regulates conflicts of interest via increased legal jeopardy.

The Impartial Conduct Standards aspect of the rule are currently effective.

The significant aspects of the BICE have been delayed until 7/1/2019.

Most legal action has supported DOL jurisdiction, but two cases that challenge the rule remain outstanding.

The US House has passed bills aimed at gutting the DOL rule.



Our Labor Continues …


About Willis Towers Watson

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 40,000 employees serving more than 140 countries. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas – the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.

Matthew ColemanSenior Consultant

101 South Hanley Road, Suite 900, St. Louis, MO 63105-3437

T +1 913 689 8679 E [email protected]

SOA Annual Meeting Variable and Fixed Annuity Trends

Aatman Dattani

October 15-18, 2017

Agenda Overview of the Annuity Market Variable Annuities

Sales Trends Guaranteed Living Benefits – Sales, Distribution Channels and Elections Product Related Updates Recent Product Changes Structured Variable Annuities Milliman Hedge Cost Index Global Response to the Low Interest Rate Environment

Deferred Income Annuities Sales Trends of DIA and QLACs

Fixed Annuities Sales Trends Product Updates

Overview of the Annuity Market

3 2017 sales are annualized based on 2017 Q2 YTD sales Source: LIMRA

Variable Annuities United States

Overview of the Variable Annuity Market 2017 YTD Variable Annuity Sales (“VA”) declined by 8% vs. 2016 The VA sales to equity market correlation does not hold anymore

Source: LIMRA

-

500

1,000

1,500

2,000

2,500

3,000

0

5

10

15

20

25

30

35

40

45

50

2007

Q1

2007

Q3

2008

Q1

2008

Q3

2009

Q1

2009

Q3

2010

Q1

2010

Q3

2011

Q1

2011

Q3

2012

Q1

2012

Q3

2013

Q1

2013

Q3

2014

Q1

2014

Q3

2015

Q1

2015

Q3

2016

Q1

2016

Q3

2017

Q1

S&P

500

$ in

bill

ions

Variable Annuity Sales by Company There has been a reshuffling in ranks of the top 10 VA writers vs. 2012

De-risking, diversification of product offerings, changes in regulation (fair value, DOL) likely impacted sales

Sales in $ billions Source: LIMRA

Variable Annuity – Sales by Distribution Channel Sales by distribution channel have stayed consistent in spite of an overall decline in sales

Source: LIMRA

34% 33% 35% 36% 34% 32%

24% 25% 24% 24% 25% 27%

19% 17% 16% 16% 15% 14%

11% 12% 13% 12% 13% 12%

2011 2012 2013 2014 2015 2016

Independent BD Career Agents Full Service Nat'l BD Banks

Variable Annuity – Guaranteed Living Benefit Sales The percentage of VA’s available without GLB’s has risen from 7% in 2013 to 21% in 2016 GLWB is the most elected rider (around 65% of the time) with GMIB a distant second (7-10%)

Source: LIMRA

67% 64% 59% 56% 52% 48%

9% 9% 12% 15% 14%

12%

7% 9% 11% 13% 17% 21%

17% 19% 17% 16% 16% 20%

2011 ($158bn) 2012 ($147bn) 2013 ($145bn) 2014 ($140bn) 2015 ($133bn) 2016 ($105bn)

GLB Elected GLB Available, Not Elected GLB Not Available Employer Plan

Variable Annuity – Guaranteed Living Benefits Sales - Continued

Independent Agents are the largest seller for GLWBs while Career Agents lead in GMIB and GMAB GLB elections have typically declined

Source: LIMRA

19% 11%

42%

11%

51%

44%

9%

46%

59%

16% 39%

82%

12% 6% 7% 12%

31%

GLWB GMIB GMAB GMWB Hybrid

Rider Sales by Channel 2Q 2017

Wirehouses Independent Career Bank

90 88 87 84 85 83 82 80 80

77 78 77 77 77 80 80

83 80 78

75 74 73

2012

Q1

2012

Q2

2012

Q3

2012

Q4

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

Election Rates when GLBs are available

Variable Annuity Market Product Changes VA products in the last year have been de-risked using the following strategies:

Increase in Rider

Fees

Benefits that Differ

by Age

Links to VIX, Treasury Indexes

Reduction in Benefits

New Products e.g. IOVA

Closing Existing Products

Fund Allocation Limitations

Limitations in Contributions

Volatility Control Funds

Structured Variable Annuities Companies introduced this product to diversify their product offering Built on VA chassis but share downside risk with policyholder Sales have increased over 100% in 2016 to $5.4 billion Impact of rising interest rates Demographics of buyers

Source: LIMRA

Milliman Hedge Cost Index Estimated Hedge Cost for a typical Lifetime GMWB Rider fee of 1.15%; M&E and Investment Management Fees of 2.25% Annual 5% rollup and resets; lifetime withdrawal rates of 4-6% depending on attained age Modeling Assumptions based on typical actuarial and behavioral assumptions used by VA writers Target fund volatility of 10%; calculations based on end of month US swap rates

60708090

100110120130140150160170180

Dec

-13

Feb-

14A

pr-1

4Ju

n-14

Aug

-14

Oct

-14

Dec

-14

Feb-

15A

pr-1

5Ju

n-15

Aug

-15

Oct

-15

Dec

-15

Feb-

16A

pr-1

6Ju

n-16

Aug

-16

Oct

-16

Dec

-16

Feb-

17A

pr-1

7Ju

n-17

(bps

)

International Variable Annuities

Strategic shift

Low Rates here to stay

Move away from interest rate risk

Focus on unit linked and protection products

Pension reforms

Low Rates here temporary

Continue writing protection products

Optimize capital efficiency and reduce costs

Negative Interest Rates

USD, AUD and NZD denominated products replaced GMAB (JPY)

SPWL with VA Features

Variable Life with GMDB converted to fixed life in 15-20 years (FIT)

Premium invested in two buckets during FIT: stable + aggressive

Stable fulfills guarantee, aggressive allows for upside

Q1 2016 Sales dropped 8% in UK, 45% in France and 18% in Rest of Europe.

GMWB sales dropped while GMAB sales rose.

Product De-risking to blame?

Global Impact of the Low Interest Rate Environment on VAs

Deferred Income Annuities United States

US Deferred Income Annuities Deferred Income Annuities sales were $2.79bn

Career agents account for 62% of DIA sales.

Qualified Longevity Annuity Contracts (QLAC) compliant DIA’s are increasingly being offered in the market Career agents account for 41% of DIA sales. The issue age and premium amounts are significantly different between QLAC and non QLAC products likely due to

IRS restrictions on the limitations on investments in QLAC accounts

Top 10 Companies / Sales in Millions DIA DIA w QLAC New York Life $926 $109 Northwestern Mutual Life 669 35 Massachusetts Mutual Life 311 NA Principal Financial Group 210 76 Guardian Life of America 178 31 Metlife 141 27 Pacific Life 82 17 AIG 82 18 Thrivent Financial for Lutherans 47 3 Lincoln Financial Group 43 6

Fixed Annuities United States

US Fixed Annuities Sales – Book Value and MVA Fixed annuity sales (Book value and MVA) were $38.7bn in 2016, up 25% vs. 2015

The low interest rate environment continues to pressurize fixed rate annuity sales

The split between qualified and non qualified products has narrowed

Source: LIMRA

35%

45%43%

40%44%

46%

65%

55%57%

60%56%

54%

2011 2012 2013 2014 2015 2016

Qualified Non-Qualified

US Fixed Annuities Sales- SPIA SPIA sales were $9.1 billion, 6% down vs 2014 but fairly robust vs historical sales

The low interest rate environment and mortality table updates likely impacted sales

The majority of SPIA sales include lifetime benefits 77% of the SPIAs sold in 2016 included a lifetime benefit Lifetime benefit election declined from 81% in 2015 to 77% in 2016 in spite of the low interest rate environment

Source: LIMRA * 2017 amounts are annualized based on 2017 Q2 YTD Sales

6.5

7.97.5 7.6

8.17.7

8.3

9.79.1 9.2

8.4

0

2

4

6

8

10

12

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017*

Sale

s ($

in b

illio

ns)

Thank you Aatman Dattani [email protected]

Milliman is among the world's largest providers of actuarial and related products and services. The firm has consulting practices in healthcare, property & casualty insurance, life insurance and financial services, and employee benefits. Founded in 1947, Milliman is an independent firm with offices in major cities around the globe. For further information visit milliman.com. The material and content is the proprietary information of Milliman or the party that provided the Content to Milliman, and Milliman or the party that provided the Content to Milliman retains all right, title, and interest in the Content. This presentation, including all Content, is copyrighted and protected by international copyright laws and treaty provisions. You agree to comply with all copyright laws worldwide in your use of this presentation, and agree that the Content may not be copied, distributed, republished, uploaded, posted, or transmitted in any way without the prior written consent of Milliman, except that you may print out a copy of the Content solely for your personal use. No intellectual property rights are transferred to you. You may use this presentation solely for personal, non-commercial purposes. You may not use this content for any other purpose, including any commercial purpose. For example, you may not co-brand or frame this content without the express prior written permission of Milliman.

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