Conference Call Addresses Payout Annuities, AXXX

February 28, 2005 at 07:00 PM

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Executives at the ING Americas-U.S. Financial Services business are thinking about retirement income planning and universal life guarantees.[@@]

ING Americas, Atlanta, an arm of ING Groep N.V. Amsterdam, put those topics on the agenda during a recent conference call.

ING Americas wants to do something about the fact that only 8% of U.S. retirees have decided what to do with their funds once they leave their retirement plans, according to Bill Lowe, president of ING Americas' ING Financial Horizons unit.

ING Americas is starting its retirement income planning effort with initiatives to educate advisors about payout annuities and strategies for addressing consumers' concerns about lack of access to cash, Lowe said.

One way to deal with liquidity concerns is to talk about commutable value features, Lowe said.

Commutable value features give annuity holders that ability to convert income streams back into lump sums.

Another ING Americas executive, Butch Britton, president of the ING Life Business Group, talked about reserving methods for universal life policies with secondary guarantees.

Policies with secondary guarantees account for 25% of ING UL sales, and ING takes care to comply with Guideline AXXX, a key UL reserve model regulation, when it sets up reserves for its UL products, Britton said.

But ING believes that a stochastic modeling approach, which relies on statistical methods for testing the performance of a product under many different conditions, will help the industry get beyond "the current noise" surrounding the controversy on the best way to reserve for UL secondary guarantees, Britton said.

Letters of credit and securitization also may help insurers back the products, Britton said.

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