What if a market move breaches variable-annuity guarantees industrywide?
Variable-annuity guarantee breaches force insurers to dump equity hedges into a falling tape — a pro-cyclical gamma loop that accelerates the equity drawdown, exactly the dynamic that hammered Japanese and US VA writers in 2008. The Hartford/Lincoln 2008 episode is the template: forced delta-hedging amplified the S&P decline and crushed insurer equity. Skeptical: post-2008 reforms cut industry VA guarantee exposure sharply, so the systemic multiplier is smaller than the cascade implies; trade insurer single-names, not the index.
Every number ships with its receipt — the odds, the range, the precedents, and a public grade at Reality Check. The statistical machinery that produces it is proprietary.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 6–18 months horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. A rate-and-equity move breaches variable-annuity guarantees industrywide, forcing insurers to dump equity hedges into a falling market. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.