Nathan Hayes / Chief Financial Officer
Perspectives from a life in leadership.
The latest essay
Life and annuity companies have moved a large share of their portfolios into privately originated credit. The extra yield is real, but boards usually see it long before they see what the loans would fetch in a sale, and that ordering is where the risk hides.
Read the essayLife and annuity companies have moved a large share of their portfolios into privately originated credit. The extra yield is real, but boards usually see it long before they see what the loans would fetch in a sale, and that ordering is where the risk hides.
Fixed and indexed annuities carry surrender charges that fall to zero on a known date. Many companies still treat that date as a sales matter rather than a contractual maturity, and the rate rise of 2022 showed what the habit costs.
Asset-intensive reinsurance to offshore reinsurers and sidecars has become a common way for US annuity writers to release capital. It can be sound, but a ceding company's board should treat the release as financing, with a counterparty, collateral and repayment risk, rather than as capital the company has earned.