The Economics of a Secondary Market for Variable Annuities

This article demonstrates that a secondary market for U.S. variable annuity policies may be immediately welfare enhancing to all parties involved: the insurer, the original policyholder, and a third-party investor. Our model reflects relevant market frictions—here, the product’s tax benefits—that produce differing valuation perspectives for the three parties. This allows for policy transfers that benefit all parties simultaneously, including the insurance company, irrespective of the level of control that it exerts over this secondary market. We illustrate our insights first with a theoretical two-period model, followed by an empirically motivated numerical analysis. Our numerical results suggest a best-estimate total welfare gain of 2.6% of the initial investment amount under the optimal secondary market structure.

This is an Accepted Manuscript of an article published by Taylor & Francis in 'North American Actuarial Journal' on 2020-11-09, available online:



Work Title The Economics of a Secondary Market for Variable Annuities
Open Access
  1. Thorsten Moenig
  2. Nan Zhu
License In Copyright (Rights Reserved)
Work Type Article
  1. Informa UK Limited
Publication Date November 9, 2020
Publisher Identifier (DOI)
  1. 10.1080/10920277.2020.1802598
  1. North American Actuarial Journal
Deposited January 13, 2022




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Work History

Version 1

  • Created
  • Added Moenig_Zhu_SecondaryMarketVA-1.pdf
  • Added Creator Thorsten Moenig
  • Added Creator Nan Zhu
  • Published
  • Updated
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