American Equity CEO Sees Annuity Competition Moderating
May 16, 2023 by Allison Bell
The head of a midsize annuity issuer says the level of competition is becoming more rational.
Anant Bhalla, the CEO of American Equity Investment Life Holding Co., told securities analysts last week that he has seen some competitors changing contract terms in recent weeks. “There is this pocket of irrationality, but more rationality,” Bhalla said. “I think the top five or six players drive everything, and then there are some marginal new players that we’re very cautious about.”
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Wink’s Moore on the Market: In this article, Anant discusses the wide range of caps in the indexed annuity market.
Being the product nerd that I am, I took to Wink, Inc.‘s AnnuitySpecs tool to do the research.
In a review of indexed annuities using an S&P 500 annual point-to-point strategy, with a cap as the moving part (and no buy-up):
The highest cap in the data set is presently 15%.
The lowest cap of these is 1.75%.
The median cap rate for these products is 8.10%.
I narrowed this list to review companies with caps greater than American Equity’s. I took a look at peer products with comparable surrender charges, street level compensation, bonus…and sure enough- there are caps as much as 3.00% greater than AEIL’s.
Bhalla suggests you should ask why that is…
SN: Appreciated Bhalla being snarky at the close of this piece. A man after my own heart! – sjm