This new SVIA resource provides a brief and helpful overview on market-to-contract ratios (also known as the market-to-book ratios): what they are, how they impact funds, and how they have changed with market environments over the years. Since market-to-contract ratios are only relevant for synthetic GICs or wrap contracts, the article focuses on wraps.
In this article, we show the history of market-to-contract ratios using SVIA data going back to 2008 and discuss how the recent rapid rise in interest rates impacts the market-to-contract ratios and the industry more generally.
While market-to-contract ratios are not a concern for plan participants since their withdrawals are at contract (or book) value, we also cover when and how plan sponsors should take market-to-contract ratios into account when administering their plan.
We encourage you to share this article with any of your stakeholders (particularly plan sponsors) who may have questions about today’s market-to-contract ratios. You may also incorporate these graphs and statistics into your own public or private presentations when used in their entirety and sourced to the SVIA.