Letters to the Editor
The Wall Street Journal
4300 Route 1 Ridge Road, Bldg #1
South Brunswick, NJ 08852

To the Editor:

We are writing in response to the recent article entitled "Investors Abandon Annuities As Industry Looks Wobbly" by Jeff D. Opdyke which appeared on The Wall Street Journal Online on November 20, 2002. NAVA has long recommended that people considering the purchase of an annuity should consider the financial soundness of the insurance company issuing the contract. However, we believe the article overstates the significance of recent ratings changes experienced by some insurance companies.

A significant cause of downgrades is the increased possibility of having to pay off enhanced benefits. With the downturn in the equities market, some variable minimum guarantees are coming into play. When market performance bounces back, many rating agency downgrades will most likely be quickly turned around.

Moreover, the vast majority of investors are not “abandoning” annuities. While some investors, like the couple mentioned in the article, may have surrendered or exchanged contracts because of worries over the financial health of their insurer, in 2002 exchanges are at recent historic lows.

Finally, recent sales figures demonstrate that Americans continue to view annuities as a safe and important part of their retirement plans. Variable annuity sales for the second quarter of 2002 were $28.8 billion, an increase of 10% from first quarter results, despite continued market uncertainty. Fixed annuity sales were up 62% in the first half of 2002 as compared with the previous year. In fact, Mr. Opdyke himself noted in an August 28, 2002 article that annuities are "the hottest product on Wall Street these days."

Sincerely,


Mike DeGeorge
VP, General Counsel