1. Variable Annuities A Secular Growth Story in US Life Insurance
Suneet Kamath
Senior Analyst – Life Insurance
Please see disclosure appendix for important disclosures and analyst certifications

2. What Investors Say about Life Insurance
I don’t understand the products.
I don’t understand how companies make money.
The return on investment in learning about the group is low.
I don’t have to own these stocks.
©Bernstein Research, 2008

3. In Terms of Understanding Annuities, Help is On the Way
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4. Why Investors Don’t Have to Own Life Insurance Stocks
Market Capitalization of Financial Sectors as a % of S&P 500
Source: FactSet
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5. Life Stocks Tend to Perform Well Relative to the Market
Life Insurance – Median Stock Price Performance Relative to the S&P 500
Source: FactSet
Note: List of companies is available upon request
©Bernstein Research, 2008

6. ROE Drives Life Insurance Valuation
Life Insurance – Projected ROE vs. P/B
Source: Company Reports, FactSet and Bernstein estimates
©Bernstein Research, 2008

7. Life Insurers’ ROEs Are Stable
Financial Services – ROE Comparison
Source: Company Reports, FactSet and Bernstein estimates
Note: List of companies is available upon request
©Bernstein Research, 2008

8. What Life Insurance Has to Offer to Investors
Large and Established In Force Blocks Drive Bulk of Current Period Revenues and Earnings
Exposure to “Catastrophic” Events is Low Versus Other Financials (e.g., Weather Related Events or Volatile Capital Markets)
Demographics Provide Favorable Backdrop
Stability in ROEs and Book Value Growth
©Bernstein Research, 2008

9. It’s Generally Working Today
Financial Services – 2007 and 2008 YTD (Through 3/31/08) Median Relative Stock Price Performance
Source: FactSet
Note: List of companies is available upon request
©Bernstein Research, 2008

10. Agenda for Discussion on Variable Annuities
Past – Historical Trends in Variable Annuities
Present – The Era of Guaranteed Living Benefits
Future – Competition in the Global Retirement Market
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11. Variable Annuities – Driver of Growth and Profitability
Product Sales Growth
Source: NAVA, LIMRA International and Bernstein estimates
Estimated ROE Targets by Product
Source: Tillinghast
©Bernstein Research, 2008

12. But What is Driving Growth and ROEs?
VA – Components of Annual Growth in AUM
Source: NAVA and Bernstein estimates
VA – Annual Average Growth in AUM vs. Net Flows,
Source: NAVA and Bernstein estimates
©Bernstein Research, 2008

13. Prior Products Provide Questionable Value to Consumers
Traditional VA vs. Mutual Fund Comparison – IRR to Consumer
Source: NAVA and Bernstein estimates
AB SubAdvisory Services Group Survey –
“Are You Interested in Training On:”
Source: AllianceBernstein, L.P.
Scenario 1 – 8% Market Return
Scenario 2 – Y1: -10%, Y2: -5%, Y3: 0%, 8% Thereafter
Scenario 3 – Actual Return, 8% Thereafter
©Bernstein Research, 2008

14. Present – SCB View of Guaranteed Living Benefits (GLBs)
GLBs Have Increased Value Proposition to Consumer
Provides Insurance Based Solution to Mitigate Longevity Risk
Academic Research Suggests Costs More Aligned with Consumers
3rd Party Distribution Sees Need for GLB Income for Life Solution
GLBs Should Improve Underlying Economics of the VA
Guarantees Should Improve Customer Persistency
Persistency Improvement Should Lead to Operating Efficiencies
Risk Management Remains an Issue, but
Life Insurers are Being More Disciplined in Mitigating Risk
Expect Companies will Improve Product Design and Risk Mitigation in the Future
©Bernstein Research, 2008

15. Evidence that GLBs Becoming a Dominant Part of the Sales Pitch
VA – Percent of VA Sales that Included a GLB, 1H:07
Source: Corporate reports and Bernstein estimates
VA – Percent of VA AUM that Included a GLB, 2Q:07
Source: Corporate reports and Bernstein estimates
©Bernstein Research, 2008

16. Evidence that 3rd Party Distribution Sees Value in GLBs
AB SubAdvisory Services Group Survey –
"Are You Interested in Training On…“
Source: AllianceBernstein, L.P.
AB SubAdvisory Services Group Survey –
"How Interested Would You Be in a Product that Could Offer Your Clients Guaranteed Income in Retirement with the Potential for Market Appreciation After Your Clients are Already Retired?“
Source: AllianceBernstein, L.P.
©Bernstein Research, 2008

17. Evidence that GLBs Improve Persistency
VA Surrender Rates Based on Election of GLBs
Source: LIMRA International
VA Surrender Rates Based on Election and Availability of GMWB Rider
Source: LIMRA International
©Bernstein Research, 2008

18. Expenses to Decline as Sales and Persistency Improve
Sales Benefits in Asset Gathering Segments
Source: Corporate reports and Bernstein estimates
©Bernstein Research, 2008

19. Evidence of Risk Mitigation Across Many Fronts
Life Insurance – Various Risk Mitigation Strategies at Work
Source: Corporate reports and Bernstein estimates
Thought I’d start with a typical investor meeting that I could have on a daily basis.
Here we have a gentleman who represents a typical Portfolio Manager that I might meet.
Next to him, we have a series of comments that I tend to hear when I speak to investors about taking positions either long or short in US life insurance.
Go through each one.
©Bernstein Research, 2008

20. Future – Long-Term Benefits of GLBs
GLBs Should Help the Life Sector Gain Share of Retirement Assets
Potential Shift in Balance of Power from Asset Management to Life Insurance as Guarantees, not Investment Performance, Become the Primary Selling Point of VAs
VA’s Low “Relative ROEs” Form a Barrier to Entry for Other Financials
$7 Trillion Long-Term Opportunity in the US Alone
Life Insurers Can Leverage Expertise Internationally
Unstoppable Favorable Demographic Trends Exist Across the Globe
Anecdotal Evidence that Life Insurers Using International Growth Opportunity to Negotiate Lower Sub-Advisory Payments to Asset Managers
©Bernstein Research, 2008

21. Optimistic that GLBs Have a Tremendous Growth Opportunity
Conclusions
Optimistic that GLBs Have a Tremendous Growth Opportunity
Value Proposition of VAs has Improved
Independent Advisors See the Need for Solutions that GLBs Provide
$7 Trillion Opportunity in the US Alone
Product and Risk Mitigation Strategies Still Being Tested But
Companies More Disciplined Today vs. the Past
Current Experience Will be Utilized to Improve Risk Management
Life Insurance Could Gain Share of Global Retirement Market
Export GLB Expertise to Markets with Attractive Demographics
Leverage Global AUM Growth Opportunity to Lower Asset Management Fees
©Bernstein Research, 2008

22. With Any Luck, Annuity Buyers & Investor Will See the Light
©Bernstein Research, 2008

23. Disclosure Appendix SRO REQUIRED DISCLOSURES
• References to "Bernstein" relate to Sanford C. Bernstein & Co., LLC and Sanford C. Bernstein Limited, collectively.
• Bernstein analysts are compensated based on aggregate contributions to the research franchise as measured by account penetration, productivity and proactivity of investment ideas. No analysts are compensated based on performance in, or contributions to, generating investment banking revenues.
• Bernstein rates stocks based on forecasts of relative performance for the next 6-12 months versus the S&P 500 for U.S. listed stocks and versus the MSCI Pan Europe Index for stocks listed on the European exchanges - unless otherwise specified. We have three categories of ratings:
Outperform: Stock will outpace the market index by more than 15 pp in the year ahead.
Market-Perform: Stock will perform in line with the market index to within +/-15 pp in the year ahead.
Underperform: Stock will trail the performance of the market index by more than 15 pp in the year ahead.
• As of 01/14/2008, Bernstein's ratings were distributed as follows: Outperform/Buy %; Market-Perform/Hold %; Underperform/Sell - 6.8%.
• Accounts over which Bernstein and/or their affiliates exercise investment discretion own more than 1% of the outstanding common stock of the following companies GNW / Genworth Financial Inc, MET / MetLife, PRU / Prudential Financial.
• The following companies are or during the past twelve (12) months were clients of Bernstein, which provided non-investment banking-securities related services and received compensation for such services AMP / Ameriprise Financial Inc, LNC / Lincoln National, MET / MetLife, NFS / Nationwide Financial, PRU / Prudential Financial.
• An affiliate of Bernstein received compensation for non-investment banking-securities related services from the following companies AMP / Ameriprise Financial Inc, MET / MetLife, NFS / Nationwide Financial, PRU / Prudential Financial.
• This research report covers six or more companies. For price chart disclosures, please visit you can also write to either: Sanford C. Bernstein & Co. LLC, Director of Compliance, 1345 Avenue of the Americas, New York, N.Y or Sanford C. Bernstein Limited, Director of Compliance, Devonshire House, One Mayfair Place, London W1J 8SB, United Kingdom.
©Bernstein Research, 2008

24. Disclosure Appendix 12-Month Rating History as of 2/28/2008
==========================================
AFL: Initiated Coverage: O - 7/15/2004; AMP: Initiated Coverage: O - 10/20/2006; GNW: Initiated Coverage: M - 10/20/2006; LNC: Initiated Coverage: M - 4/19/2002; MET: Initiated Coverage: O - 4/19/2002; Rating History: O - 1/15/2008;NFS: Initiated Coverage: O - 4/19/2002; Rating History: M - 1/18/2006;PFG: Initiated Coverage: O - 4/19/2002; Rating History: O - 7/10/2007;PRU: Initiated Coverage: M - 4/19/2002; Rating History: O - 10/9/2003;
OTHER DISCLOSURES
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To our readers in the United Kingdom: This report has been issued or approved for issue in the United Kingdom by Sanford C. Bernstein Limited, authorized and regulated by the Financial Services Authority and located at Devonshire House, 1 Mayfair Place, London W1J 8SB, +44 (0)
To our readers in member states of the EEA: This report is being distributed in the EEA by Sanford C. Bernstein Limited, which is authorized and regulated in the United Kingdom by the Financial Services Authority and holds a passport under the Investment Services Directive.
To our readers in Australia: Sanford C. Bernstein & Co., LLC and Sanford C. Bernstein Limited are exempt from the requirement to hold an Australian financial services license under the Corporations Act 2001 in respect of the provision of the following financial services to wholesale clients:
• providing financial product advice;
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Sanford C. Bernstein & Co., LLC and Sanford C. Bernstein Limited are regulated by the Securities and Exchange Commission under US laws and by the Financial Services Authority under UK laws, respectively, which differ from Australian laws.
One or more of the officers, directors, or employees of Sanford C. Bernstein & Co., LLC, Sanford C. Bernstein Limited and/or its affiliates may at any time hold, increase or decrease positions in securities of any company mentioned herein.
Sanford C. Bernstein & Co., LLC, Sanford C. Bernstein Limited, or its or their affiliates may provide investment management or other services to the pension or profit sharing plans, or employees of any company mentioned herein , and may give advice to others as to investments in such companies. These entities may effect transactions that are similar to or different from those recommended herein.
©Bernstein Research, 2008

25. Disclosure Appendix CERTIFICATIONS
• I/(we), Suneet Kamath, CFA, Senior Analyst(s), certify that all of the views expressed in this report accurately reflect my/(our) personal views about any and all of the subject securities or issuers and that no part of my/(our) compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views in this report.
Copyright 2008, Sanford C. Bernstein & Co., LLC, a subsidiary of AllianceBernstein L.P. ~ 1345 Avenue of the Americas ~ NY, NY ~ 212/ All rights reserved.
This publication is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of, or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject Bernstein or any of their subsidiaries or affiliates to any registration or licensing requirement within such jurisdiction. This publication is based upon public sources we believe to be reliable, but no representation is made by us that the publication is accurate or complete. We do not undertake to advise you of any change in the reported information or in the opinions herein. This publication was prepared and issued by Bernstein for distribution to eligible counterparties or professional clients. This publication is not an offer to buy or sell any security, and it does not constitute investment, legal or tax advice. The investments referred to herein may not be suitable for you. Investors must make their own investment decisions in consultation with their professional advisors in light of their specific circumstances. The value of investments may fluctuate, and investments that are denominated in foreign currencies may fluctuate in value as a result of exposure to exchange rate movements. Information about past performance of an investment is not necessarily a guide to, indicator of, or assurance of, future performance.
©Bernstein Research, 2008

26. Disclosure Appendix
Provided courtesy of Pruco Life Insurance Company (in New York, Pruco Life Insurance Company of New Jersey) both located in Newark, NJ, or by Prudential Annuities Life Assurance Corporation, Shelton, CT, as well as Prudential Annuities Distributors, Inc., Shelton, CT. All are Prudential Financial companies. The views expressed are those of BernsteinResearch, AllianceBerstein L.P. They are subject to change at any time. These views do not necessarily reflect the view of the Prudential Financial companies.
BernsteinResearch, AllianceBerstein L.P. is not affiliated with any of the Prudential Financial companies.
For Financial Professional Use Only / Not For Use With The Public
IFS-A Ed. 04/2008
©Bernstein Research, 2008