Market Value Adjustment on stable value

[Guest newport]

If we are looking to trade providers and there is a market value adjustment on the Stable Value Fund, how would this be passed along to the plan sponsor(or the new provider) ? And can someone define a put option for me. Thank you!

[Guest newport]

If we are looking to trade providers and there is a market value adjustment on the Stable Value Fund, how would this be passed along to the plan sponsor(or the new provider) ? And can someone define a put option for me. Thank you!

I didnt get any response so let me try to clear it up a little bit...

Company A has a Stable Value Account that does extraordinarily well, let’s call them Tennessee Life. SVA has a great market to book ratio and they are offering exceptional returns on a participant level….then interest rates rise and the underlying (let’s call them bond investments) creep lower and lower and eventually the market to book ratio is decimated to say…93%.

They have a semiannual reset and I assume the first order of business is to continue to lower the guarantee because there is no basement. The underlying investments then continue to fall until there just simply is not enough capital to sustain the fund…my questions are

a) Would the plan sponsor have any risk beyond that of the credit worthiness of Bass Mutual

b) Would plan participants bear any risk to their principal inside the account or is this backed by the full faith and credit of Bass Mutual

c) Would there be a way to replace this fund with a new one without the plan sponsor incurring any of these true ups

d) How and in what way would a market value adjustment affect the plan sponsor