The guarantee of annuity principal is grounded in the legal reserve system. The legal reserve system, developed specifically to protect contract owners (and insurance policy owners) through prudent asset management and accounting practices, has been in existence since the beginning of the 20th century.
At the heart of the legal reserve system are the statutory reserves that every insurance company must establish to protect its contracts and contract owners. The statutory reserve that the company is required to establish is based on the contractual provisions of its annuity or life contracts.
Last Updated: 9/23/2012 10:05:00 PM