The document appears to be a presentation from the 2017 AALU Annual Meeting held in Washington DC from April 30 to May 2. It discusses trends in life insurance product rates and dividends over time and how these may be impacted by changes in interest rates. It includes charts showing historical indexed universal life cap rates and whole life dividend rates for various carriers from 2005 to 2017. It also provides a hypothetical analysis of how projected changes in treasury rates and bond yields could influence future cap rates on indexed universal life products. The presentation is a preview and the full version can be requested by email.

1. 2017 AALU ANNUAL MEETING
APRIL 30 – MAY 2 | WASHINGTON DC Honor the Past. Own your Future.
Staying Ahead of the Life
Product Intelligence Curve
James Joyce, Lion Street
Michael Fontanini, Lion Street
Tyler Horning, TDC Life

2. Honor the Past. Own your Future.
Historical Indexed UL Cap Rates
6.40%
5.27%
4.03%
12.00%
13.00%
12.00%
11.00%
10.50%
17.00%
16.00%
15.00%
14.00%
13.00% 13.00%
12.50%
10.75%
11.00%
11.50%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Moody's AAA Bond Yield 7-Year Avg. of Moody's
Pacific Life Cap Rate Minnesota Life Cap Rate
Prudential Cap Rate

3. Honor the Past. Own your Future. 3
Hypothetical Projected Hypothetical 7-Year Avg.
Treas. Rate One Year Bond Yield AAA Corp. Bond Yield 10.25% Cap Affordable
Year Increase Treas. Rate Increase Bond Yield (Budget) Hedge Cost Cap Rate
2010 - 0.32% - 4.94% - - -
2011 - 0.18% - 4.64% - - -
2012 - 0.17% - 3.67% - - -
2013 - 0.13% - 4.24% - - -
2014 - 0.12% - 4.16% - - -
2015 - 0.32% - 3.89% - - -
2016 - 0.61% - 3.67% - - -
Today - 1.01% - 4.01% 4.17% 4.13% 10.25%
2017 0.50% 1.51% 0.25% 4.26% 4.08% 4.24% 9.50%
2018 0.50% 2.01% 0.25% 4.51% 4.06% 4.35% 9.25%
2019 0.50% 2.51% 0.25% 4.76% 4.21% 4.46% 9.25%
2020 0.50% 3.01% 0.25% 5.01% 4.32% 4.57% 9.50%
2021 0.00% 3.01% 0.00% 5.01% 4.44% 4.57% 9.75%
2022 0.00% 3.01% 0.00% 5.01% 4.60% 4.57% 10.25%
2023 0.00% 3.01% 0.00% 5.01% 4.80% 4.57% 11.00%
Bond
Yields Rise
at ½ the
Rate of the
1Y Treas.
Interest Rate Info and Assumptions:
1Y Treas. 25Y Historical Avg: 2.87%
AAA Bond 25Y Historical Avg: 5.93%
Bond-Treas. 25Y Avg. Spread: 3.06%
Current 1Y Treas: 1.01%
Current AAA Bond: 4.01%
Current 10.25% Cap Hedge Cost: 4.13%
Current Cap Rate: 10.25%
Hedge Cost and Affordable Cap Rate Hypothetical Assumptions:
Calculation Method: Black Scholes Options Pricing Formula
Strike Price: 100.0% 102.5% 105.0% 110.0% 115.0% 120.0% 125.0% 130.0%
Implied Volatility: 16.40% 15.60% 15.00% 14.00% 13.50% 13.00% 12.50% 12.00%
S&P 500 Dividend: 2.00%
One-Year Risk-Free Rate: Projected Treasury Rates Shown
Options Budget: Projected 7-Year Avererage Bond Yield Shown
Potential Effect of Rising Interest Rates on
IUL Cap Rates
Hypothetical and for conceptual and discussion purposes
only. Actual results will vary. This example is meant to
show the potential relationship between market interest
rates, bond yields and affordable cap rates based on
general principles and assuming the implied volatility
curve shown. Changes in the implied volatility curve will
impact options pricing. Other factors affecting options
pricing and a carrier’s options budget may exist that can
have an impact on declared caps. Not representative of
any specific carrier or product.

4. Honor the Past. Own your Future.
CARRIER 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
2016-17
CHANGE
2008-17
CHANGE
NORTHWESTERN MUTUAL1 7.50 6.50 6.15 6.00 5.85 5.60 5.60 5.60 5.45 5.00 -0.45 -2.50
MASSMUTUAL 7.90 7.45 6.85 6.80 7.00 7.00 7.10 7.10 7.10 6.70 -0.40 -1.20
METLIFE 6.25 6.00 5.50 5.00 5.50 5.25 5.10 5.10 5.00 4.70 -0.30 -1.55
OHIO NATIONAL 6.65 6.40 6.40 6.15 6.15 6.00 6.00 6.00 6.00 5.75 -0.25 -0.90
GUARDIAN 7.25 7.30 7.00 6.85 6.95 6.65 6.25 6.05 6.05 5.85 -0.20 -1.40
PENN MUTUAL 6.50 6.34 6.34 6.34 6.34 6.34 6.34 6.34 6.34 6.34 None -0.16
NEW YORK LIFE 6.79 6.14 6.11 6.11 5.80 5.90 6.00 6.20 6.20 6.20 None -0.59
NATIONAL LIFE OF VT 6.25 6.25 6.25 6.25 6.00 5.75 5.75 5.75 5.75 5.75 None -0.50
2017 Whole Life Dividend Interest Rates
1Northwestern Mutual also reportedly increased the administrative expenses component of its 2017 dividend scale, further reducing its dividend.

5. Honor the Past. Own your Future.
This is a preview of the presentation.
To receive the full version, email
marketing@lionstreet.com.

6. Honor the Past. Own your Future.
This is a preview of the presentation.
To receive the full version, email
marketing@lionstreet.com.

7. Honor the Past. Own your Future.
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8. Honor the Past. Own your Future.
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9. Honor the Past. Own your Future.
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10. Honor the Past. Own your Future.
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11. Honor the Past. Own your Future.
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12. Honor the Past. Own your Future.
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13. Honor the Past. Own your Future.
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14. Honor the Past. Own your Future.
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15. Honor the Past. Own your Future.
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16. Honor the Past. Own your Future.
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17. Honor the Past. Own your Future.
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