While executives said they could only name new partners willing to be identified, a number of new-product filings with the Securities and Exchange Commission in recent months, by firms such as AXA Equitable and Pacific Life, have named SSgA and BlackRock Inc. as managers of passive strategies. For example, in a February filing for three new asset allocation strategies to be launched May 1, Pacific Life said SSgA will manage passive domestic aggregate bond and high-yield bond portfolios, while New York-based BlackRock will manage four passive domestic equity portfolios large-cap growth and value, as well as small-cap growth and value. Dimensional Fund Advisors Inc., Santa Monica, Calif., will manage the only active options a large-cap international portfolio and an emerging market portfolio.
Recent filings by AXA Equitable, meanwhile, have reported progress on the companys action plan to control hedging costs, described in February by Mr. DuVerne as restructuring the allocation funds, reallocating assets to index plus or index like funds.
Since November, the New York-based subsidiary of Paris-based AXA Group has slashed the number of options available to new clients of its Accumulator Variable Annuity product to 35 from 73, dropping actively managed offerings from AllianceBernstein LP, Ariel Investments LLC, BlackRock, Capital Guardian Trust Co., Davis Selected Advisors LP, Evergreen Investment Management Co., Franklin Resources Inc. and Marsico Capital Management LLC, among others. At the same time, it added SSgA as a subadviser, either of stand-alone index options or as a 50% passive component to some of the lineups remaining active managers. AXA also gave some passive mandates to AllianceBernstein.
Kenneth Mungan, Chicago-based leader of actuarial and consulting firm Milliman Inc.s financial risk management practice, said the hedging programs put in place by many variable annuity sponsors following the equity market plunge between 2000 and 2002 have been very successful, but fallout from the current crisis is likely to include efforts to narrow the active component of programs that cant be easily hedged.
For an industry that historically emphasized actively managed funds
this is really something new, Mr. Mungan said. Firms such as AXA and Pacific Life have been among the first to move aggressively, but the same pressures could lead other insurers to take similar steps, he said.
It could take until around May 1, the yearly deadline for filing prospectus changes for variable annuity products, before it becomes apparent how much of a trend this is, said Tamiko Toland, editor of New York-based mutual fund research and advisory firm Strategic Insight LLCs Annuity Insight research product.