7 Things Annuity Executives Said About Q3

Equitable CEO Mark Pearson expressed satisfaction with profit margins in the RILA market, in spite of reports of new players jumping into that market.

“It’s still the case that it’s sort of eight players in the market there against nearly 50 players in the fixed annuity market,” Pearson said.

Equitable has heard of the new entrants, “but, at the moment, we don’t see them,” Pearson said. “Pricing remains very, very strong.”

5. Some companies still like the market for multi-year guaranteed annuities.

Earlier this year, some executives at insurers and insurance company owners seemed to imply that the market for annuities that guarantee a fixed rate of return for a specified number of years was too competitive.

This quarter, no one had bad things to say about MYGA contracts, and Charles Lowrey, the CEO of Prudential Financial, noted that his company had introduced the Wealth Guard MYGA contract.

6. Insurers seem to be comfortable with surrender levels.

In the past, rapid increases in interest rates have caused consumers to trade fixed products with low rates for variable products or for fixed products with higher rates.

In some cases, those kinds of asset flows have caused problems for financial services companies.

Securities analysts frequently asked about annuity contract surrenders during the latest round of earnings calls.

Company executives said they were happy with asset retention levels.

At Jackson, for example, Prieskorn said policyholder behavior has been in keeping with the company’s expectations,

“We’ve seen a little bit of an uptick in variable annuity surrenders, but that would be kind of natural with the rebound in the equity markets,” Prieskorn said. “That’s naturally part of that dynamic behavior that I think we would typically expect and include in our modeling.”

7. Annuity holders and their contracts are getting older.

Prieskorn pointed out that one reason for annuity assets to flow out is one that insurers have known about all along: Time is passing.

Some assets have been flowing out of variable annuities, in agreement with company expectations, simply because of the aging of the company’s book of annuities, Prieskorn said.

Credit: Sergey Nivens/Shutterstock