I'm quite sure that standard SPIAs sold today are guaranteed contracts, no room for the ins company to back out if life spans extend unexpectedly.
But note that companies already price for some "expected" mortality reductions.
There was a time when SPIAs were "participating" with planned dividends. But I think you'd have trouble finding one today (maybe NW Mutual Life).
When I said that longevity annuities are more volatile than regular SPIAs, I was thinking about this risk, which is non-diversifiable within the annuity line.
So what happens to the company?
- The annuity lines are very small and the losses would probably be covered by other lines.
- The life insurance contracts become more profitable than expected, generating unexpected profits there.
- If the company fails, then we're over to
http://www.early-retirement.org/for...etime-annuity-issuer-goes-bankrupt-27528.html