Prudential Retirement, a business unit of Prudential Financial, Inc. (NYSE:PRU), today released a new white paper,
Assessing Stable Value After 2008: Performing as Designed
“Stable value as an asset class performed as it was designed to do during the financial crisis,” said Michael L. Davis, senior vice president and head of Stable Value, Prudential Retirement. “This
explores how the changes in the stable value industry have made the asset class a safer and more secure investment option, and underscores its important role as a cornerstone of the retirement strategy for millions of plan participants.”
highlights a number of steps that have been taken to increase the security of the asset class, including a more thorough and accurate risk assessment for the asset class and more conservative investment guidelines making stable value more resistant to future market dislocations.
notes that stable value has continued to generate strong relative performance and deliver guaranteed yields comparable to intermediate-term bond funds, but with low volatility comparable to that of money market funds. With strong plan participant demand, between 2007 and 2012, savings entrusted to stable value rose from $416 billion to $645.5 billion.
Davis, who joined Prudential in November 2012 from the U.S. Department of Labor’s Employee Benefit Security Administration, notes the stable value marketplace in 2013 differs from the one that existed in 2008.
“The provider landscape has changed and while these changes may have been disruptive in the short term, they are now heralding a return to the conservative investment strategies, risk parameters and performance goals that characterized the asset class when it debuted four decades ago.”
As of Dec. 31, 2012, Prudential Retirement has $106.9 billion in stable value retirement account values. Guarantees are based on the claims-paying ability of the issuing insurance company and are subject to certain limitations, terms and conditions.