Metlife

From 2007 annual report:

Chairman's Letter:
"Our individual variable annuity business in the U.S. had a very strong year in 2007 with a record $16.5 billion in individual annuity premiums and deposits. We have increased our market position in this business from 11th in 2000 to 2nd at the end of 2007. Our expanding distribution reach over the past several years, as well as the introduction of new and innovative variable annuity offerings, has enabled us to achieve this significant growth."

"The growth in the Individual segment was primarily due to higher fee income from variable life and annuity and investment-type products and growth in premiums from other life products"

On exposures:
"The Company’s investments in equity securities and equity-based fixed maturity securities expose it to changes in equity prices, as do certain liabilities that involve long-term guarantees on equity performance. It manages this risk on an integrated basis with other risks through its asset/liability management strategies. The Company also manages equity market price risk through industry and issuer diversification, asset allocation techniques and the use of derivatives."

On hedging:
"Equity index options are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products offered by the Company. To hedge against adverse changes in equity indices, the Company enters into contracts to sell the equity index
within a limited time at a contracted price."


From the 2008 report:

Chairman's Letter: (trying to remain confident about the future as well as past policies)
"This growth was driven by a significant increase in fixed annuity deposits as well as strong variable annuity deposits. Our annuity product portfolio remains competitive and, just as important, we are maintaining our pricing discipline. It is at times like these that consumers increasingly seek out the guarantees that only the insurance industry can provide, and we remain committed to delivering on the promises we make."

Business Outlook: (not as confident)
Management expects 2009 premium, fees and other revenues to be down slightly compared to 2008 results. Individual Business experienced a significant decline in asset-based fees in annuity and variable life products in the second half of 2008 due to equity market declines. This depressed level of fee revenue is expected to continue in 2009.

The economic crisis and the resulting recession have had and will continue to have an adverse effect on the financial results of companies in the financial services industry, including the Company. The declining financial markets and economic conditions have negatively impacted our investment income and the demand for and the cost and profitability of certain of our products, including variable annuities and guarantee riders.

My conclusion is that hedging certainly helped their business relative to others but the variable annuity business is a tough business these days.