VAs: Get Less, Pay More

Variable-annuity issuers raise prices, reduce benefits in effort to restore profits

Life insurers are rapidly dialing back on the generosity of the performance guarantees they sell on variable annuities, but still-bigger change may lie ahead as companies grapple with sharply higher risk-management costs, industry consultants say.

In general, new buyers are getting less for their money than purchasers did a few months ago, in some instances a lot less. But the most recent round of changes—including higher prices and reductions in benefits that will take effect at many insurers this month—still leave total fees short of what the new annuities will cost the insurers to fully hedge their guarantees against market risk, says Ramy Tadros, who heads the North American insurance practice at consulting firm Oliver Wyman...

WSJ: Get Less, Pay More