My source says that VA money is held in an independent account and is protected from bankruptcy. I can’t provide you any information beyond that.

Thanks.  I appreciate the feedback.

The guarantees are backed by the insurance company.  Separate accounts are just that…separate.  Boone, I don’t want to be a jerk, but geez, you really need to know this stuff.

That would be true for the subaccount values, but I suspect something entirely different for amounts guaranteed beyond the subaccount values.  Anyone know for sure where guarantees above market value come out in BK (assuming it ever got that far, which I don’t believe it will)?

I hear you anon, but I’m a stock guy exclusively, so annuities aren’t my thing at all.

Indyone, the guarantees are only as good as the claims paying ability of the company.  It isn't very likely that anyone will make good on these guarantees unless they are relatively insignificant.

Boone,  think of it the same way as if somebody had a Lehman broker, and owned $1,000,000 worth of GM.   The client still has his $1,000,000.

Indyone, the guarantees are only as good as the claims paying ability of the company.  It isn’t very likely that anyone will make good on these guarantees unless they are relatively insignificant.

Who has significant $$ with AIG. I have about 3 mill with sunamerica VAs. Wish I didn’t.

Again, wouldn’t these reserves be used to at least partially offset these obligations?

Interesting.  I’ll never claim to know it all, so I’m up for a lesson…just what are insurance comany reserves held for?

Forgive me if this isn’t what the original poster is asking, but:

I can’t comment on the fixed annuities, but VA subaccounts are seperate, the gaurantees are the concern.

that is correct sir!

The guarantees don’t have that much value.  With the typical GMIB, it takes a period of time until the product can get annuitized.  I’ve mentioned in another thread that these products have very low annuitization rates.  It will take a compound return of under approximately 2.5% over a 7 + year period (give or take), for an insurer to have a possibility of losing any money. 

Just another thought, these contracts tend to have things like current M&E charges and maximum M&E charges.  You have the same thing with the living benefit riders with a current charge and a guaranteed maximum charge.   Someone could easily take over these contracts and raise these costs and most likely be pretty profitable on the business.

In California, fixed annuities (such as AIG) are covered under the California Life & Health Insurance Gaurantee Association:

"Are covered life insurance and annuity policies fully protected?
No.
The maximum amount of protection for which the Guarantee Association
may become liable for life insurance and annuity policies is as
follows:
Life insurance death benefit protection: 80% of the policy death
benefit up to a maximum of $250,000;
Life insurance net cash surrender and net cash withdrawal values: 80%
of the policy value up to a maximum of $100,000;
Present value of annuity benefits including net cash surrender and net
cash withdrawal values: 80% of the present value up to a maximum of
$100,000.
Life insurance benefits including net cash surrender and net cash
withdrawal values, and annuity benefits including net cash surrender
and net cash withdrawal values are subject to interest rate
adjustments. Generally, interest rate reductions are made when an
insolvent insurer promised a rate of interest in excess of that
provided for in the California Life & Health Insurance Guarantee
Association Act.
The maximum total amount the Guarantee Association will provide for any
one individual for life insurance and annuity coverage is $250,000,
even if that individual is covered by multiple life insurance policies
and annuities."

So, in CA, if you have $125,000, you are covered up to the maximum of $100k.