Probability vs. attractiveness within a performance analysis of a life annuity business

Combining insurer’s profitability with products’ attractive- ness in terms of marketing competitiveness is a critical issue within the risk/profit management of an insurance business. In particular life in- surance products are characterized by the presence of financial and de- mographic risk sources, whose combined effect requires suitable manage- ment strategies. This paper deals with the impact of the load factor on life annuity portfolio performance from the insurers point of view. The aim is to build a performance indicator that clearly points out the role of the load factor in the performance making, giving to it a central role in the company political strategy. Such index is characterized by a simple mathematical structure and fit to the purpose: in fact it provides clear indications to the manager about the influence of the load factor on the performance of the life annuity business line.