Judging by their low lapse rates during the financial crisis, variable annuity contract owners knew when their living benefits were “in the money”—that is, when the account value fell below the benefit base—and consequently held onto them even tighter than they normally would.

That’s one finding of a recent study by Ruark Consulting, the Simsbury, Conn.-based actuarial and reinsurance consulting firm. Based on seven million policy years of data from eight VA issuers over the period from 2007 to 2010, the results were presented at the Society of Actuaries’ Equity-Based Insurance Guarantees meeting in Chicago in November.  

At a time when some VA issuers are growing ambivalent about that business— especially after a quarter when stock prices and interest rates fell and some issuers posted hundreds of millions of dollars in new reserves against those blocks of business—policy lapse rates are under scrutiny.