Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Randy Binner - FBR Capital Markets.
Randy Binner – FBR Capital Markets
A few questions on competition. Maybe starting with Kevin, variable annuities have obviously been on the minds of a lot of investors recently and particularly the guarantees that were supposed to protect policyholders from downside of the market and quite likely will may be curtailed because of the hedging risk. Is that something specifically you’ve seen yet or are you hearing about that yet, in the context of how indexed annuities compete with variable annuities?
Kevin Wingert
Well, I do think Randy, we are seeing movement of business from those types of products and I do think that there was some real probably lack of understanding as to what those guarantees were actually going to do; most of those guarantees being driven either around income or death benefit. So I think there is probably a lot of consumers that are disappointed.
I know there are hedging issues that were related to those variable products, have been on the minds of rating agencies for the last two or three years and insurance regulators at the state level, as to whether they had any guaranteed fund issues that they were backing up on those particular benefits.
I know there’s a lot of people in the industry quite concerned about the issues there on the variable side and the hedging issue is something we actually ran into on Wall Street, with people that we had talked to about hedging that we do, talking about how the variable companies are hedging those, how they’re using dynamic hedging and a lot of uncertainty in that area.
So I think there is a lot of confusion out there, which is the beauty of our products. I think our products benefit. Our products provide guaranteed living benefits through either the income rider, the annuitization benefit, the death benefit, the cash-out value, so I think that’s our story and I see some real opportunities going forward over the next couple of years as our products continue to shine and show the benefits.
So yes, I think those folks have got some struggles and we will see some benefits from that side of it.
Randy Binner – FBR Capital Markets
I mean, I guess just to put a little more of a point on it, have you seen variable-annuity providers cut back on guarantees yet and would you expect that to happen?
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