Press Room
Press Release

FOR IMMEDIATE RELEASE | February 17, 2000
CONTACT: Christine Hudacko, (703) 707-8830 ext. 15

NAVA RECOMMENDS GUIDELINES FOR REPORTING NET FLOWS

Washington, DC - The variable products industry is one of the fastest growing financial services industries. But how fast is it growing exactly? Unfortunately, the answer is not easily calculated. Capturing all assets within variable annuity or variable life products is complex, making the estimate of net flows potentially inaccurate. Recognizing how important precise reporting is to consumers, analysts and the industry, the NAVA' (NAVA) Board of Directors has recommended standardized guidelines for reporting variable product net flows. The board approved the guidelines, which were designed by a task force of NAVA members, at its meeting on February 6, held in conjunction with NAVA's Marketing Conference.

"We feel that it is important that any calculations of net flow data reflect all variable product assets," says Mark Mackey, president and CEO of NAVA. For example, many contract owners put money in a fixed interest account and then dollar cost average the money into other funds over 6-12 months. Dollar cost averaging deposits can account for as much as 70% of new money flow into variable products. In addition, other variable product assets such as unregistered group annuity contracts should be accounted for. "The omission of any or all of these variable product assets would present an incomplete picture of the industry's net flows," says Mr. Mackey.

NAVA's guidelines use a survey method to account for all necessary data. The surveys are easy to follow and ask for information that is generally available through an issuer's accounting or administration systems. The Variable Annuity Research and Data Service (VARDS) has already agreed to follow the recommended guidelines.

Established in 1991, NAVA is a not-for-profit organization dedicated to increasing public knowledge and acceptance of annuity and variable insurance products. NAVA's mission is to promote the growth, acceptance and understanding of annuity and variable life products to retirement-focused Americans; to provide educational and informational resources to its members and the public; to protect consumers by encouraging adherence to the highest ethical standards by insurers, distributors and all other participants in the diverse industry; and to protect and advance the interests of its members.