Rocha, RobertoMorales, MarcoThorburn, Craig2012-06-192012-06-192006-06https://hdl.handle.net/10986/8456Empirical analyses of annuities markets have been limited to a few industrial countries and restricted by data limitations. Chile provides excellent conditions for research on annuities because of the depth of its market and the availability of data. The authors use a panel of life insurance company data to examine econometrically the main determinants of the annuity rate, defined as the internal rate of return on annuities. The results indicate that the annuity rate is determined by the risk-free interest rate, the share of privately-issued higher yield securities in the portfolio of providers as a proxy for the spread over the risk-free rate, the leverage of providers, the level of broker's commissions, the market share of individual providers, the level of the premium, and the degree of market competition. The results also show that efforts to improve market transparency produced structural shifts in the parameters of the annuity rate equation. The results are consistent with separate research on money's worth ratios, and indicate the need to develop appropriate financial instruments, allowing providers to hedge their risks while extracting higher returns, and also to ensure competition and transparency in annuities markets, in order to ensure good outcomes for annuitants.CC BY 3.0 IGOADVERSE SELECTIONAGENTSAGGREGATE DEMANDAGGREGATE SUPPLYANNUITIESANNUITIES MARKETSANNUITYANNUITY MARKETSANNUITY PROVIDERSANNUITY RATEANNUITY RATESASSETSAVERAGE COSTSBANKRUPTCYBROKERSCAPITAL MARKETSCENTRAL BANKCOMMERCIAL BANKSCOMMISSIONSCONSUMERSCREDIT RISKDEMAND CURVEDISCLOSUREDISCLOSURE RULESECONOMETRIC ANALYSISECONOMIES OF SCALEEXPECTED PRESENT VALUEEXPECTED RETURNSFINANCIAL ASSETSFINANCIAL INSTRUMENTSFINANCIAL SECTORFIXED ANNUITIESFIXED INCOMEGDPGOVERNMENT BONDSINDEXED BONDSINSURANCE COMPANYINSURANCE INDUSTRYINTEREST RATEINTEREST RATESINTERNAL RATE OF RETURNLIFE ANNUITIESLIFE EXPECTANCYLIFE INSURANCELIFE INSURANCE COMPANIESLIQUIDITYLONGEVITY RISKSMACROECONOMIC CONDITIONSMARKET RISKMONOPOLYMORTALITY TABLESMORTGAGESNORMAL RETIREMENT AGEOPPORTUNITY COSTPAYOUTPENSION FUNDPENSION FUND ADMINISTRATORSPENSION LAWPENSION REFORMPENSION REFORMSPENSION SAVINGSPENSION SYSTEMPENSIONERSPENSIONSPORTFOLIOPORTFOLIO COMPOSITIONPORTFOLIO RETURNPORTFOLIO RETURNSPORTFOLIOSPREMIUMSPRIVATE PENSIONPRIVATE PENSION FUNDSPRIVATE PENSION SYSTEMSPRIVATE PILLARSPROFIT MARGINSPROFIT MAXIMIZATIONRATES OF RETURNREINVESTMENT RISKRESERVESRETIREESRETIREMENTRETIREMENT INCOMERISK AVERSIONRISK PREMIUMRISK-FREE RATEROASAVINGSSECURITIESSTATEMENTSSTRUCTURAL CHANGESUBSTITUTION EFFECTSUPERVISORY AGENCYTRANSPARENCYTREASURY BONDSUNDERWRITINGVALUATIONWAGESWEALTHWorld Bank10.1596/1813-9450-3929