According to a report by Moody's Investor Service, variable annuities continue to "negatively impact the balance sheets of the three largest variable annuity writers." Those three being: Prudential, Jackson National and MetLife.
"Balance sheet headaches are lingering long after the end of the financial crisis," says Scott Robinson, a Moody's senior vice president. "The steep drop in equities during the financial crisis prompted insurers to increase reserves and capital to offset risk linked to variable annuities, and although risk exposures have decreased, they are still substantial."
The report examines three of the largest variable annuity writers—Prudential Financial, Jackson National, and MetLife—and gives a high-level overview of the companies' policies containing guaranteed living benefits. In the report, Moody's performs a simplified stress test of this business using publicly available information.
