Conning Research: Variable Annuity Companies Must Manage Product Complexity to Compete

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HARTFORD, Conn., Sept. 5 2006 — An increase in product features and guarantees have driven variable annuity growth in recent years, but a new study from Conning Research & Consulting Inc. suggests that this strategy has also greatly increased the complexity of both the products and the associated management effort required by insurers.

“Companies in the life-annuity industry are being driven to pursue growth because of a build-up of capital that is outstripping broad premium growth, and we believe that the industry will follow its traditional growth strategy of competing on price and product features,” said Scott Hawkins, analyst at Conning Research & Consulting, Inc. “A renewed focus on growth will certainly create even more complexity in variable annuities, so in this environment, managing product complexity is a key competitive requirement for insurers.”

The Conning Research study “The Growing Cost of Variable Annuity Complexity: Is It Worth It?” explores product complexity in variable annuities, and its impact on competition, growth and profitability in the segment. Furthermore, it looks at how companies are addressing the challenges posed in managing this product complexity.

“As companies prepare for a strategic shift towards growth they will again be confronted with managing the risks and opportunities that new variable annuity complexity presents,” said Stephan Christiansen, director of research at Conning Research. “In the near term, offering more complex variable annuities may be a relatively conservative growth strategy compared to other growth alternatives. In the long run, the strategic challenge is in understanding and managing the risks associated with these complex products.”

“The Growing Cost of Variable Annuity Complexity: Is It Worth It?” is available for purchase from Conning Research & Consulting, Inc., by calling (888) 707-1177 or by visiting the company’s web site at

About Conning Research & Consulting, Inc.

Conning provides insurance industry analysis to insurers and industry stakeholders. The Conning name has represented excellence in independent insurance industry research for more than 40 years. As a result of its wealth of experience and intimate knowledge of the insurance industry, Conning understands industry challenges and opportunities and provides in-depth insights and analyses on a wide range of industry products and issues. Conning is headquartered in Hartford, CT.