Universal life products with long-term secondary guarantees (ULSG) have been sold since the late 1990s.

This report explores several aspects of ULSG products from a pricing and financial reporting perspective and covers a variety of topics, including:

• The relationship of internal rate of return (IRR) to return on equity (ROE)
• The American Institute of Certified Public Accountants (AICPA) Statement of Position (SOP) 03-1
• Stochastic projections
• Sources of profit
• Cost of the secondary guarantee
• C3 Phase III

This report provides an updated perspective on a market that has matured since the publication of the 2007 research report Secondary Guarantee Universal Life: Practical Considerations, which discussed product risks, pricing considerations, risk management, and reserve financing.