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- Title
Investment Returns of Variable Annuities: Recent Results.
- Authors
McNamara, Michael J.; Oppenheimer, Henry R.
- Abstract
Variable annuities were developed and are marketed as a means of preserving the purchasing power of the annuitant during periods of inflation. Over the past two decades, the growth in assets and number of persons covered under individual and group variable annuity plans has been spectacular. This paper provides an analysis of the investment performance of a sample of variable annuities for the period year-end 1973 to year-end 1988. Returns are analyzed by subperiod, by portfolio turnover. The returns are compared to appropriate benchmark return series. Although the investment returns for variable annuities did keep pace with inflation over the period, the returns significantly trailed the Standard and Poor's 500. In addition, variable annuity returns lagged the Consumer Price Index (CPI) during periods of high inflation and were significantly higher than the CPI during the recent period of low inflation.
- Subjects
VARIABLE annuities; PRICE inflation; EFFECT of inflation on insurance; INVESTMENTS; EMPLOYEE benefits; VARIABLE life insurance policies
- Publication
Benefits Quarterly, 1990, Vol 6, Issue 4, p61
- ISSN
8756-1263
- Publication type
Article