Wave of Fixed-Rate Annuity Maturities Looms, Morgan Stanley Analysts Say
February 25, 2025 by Allison Bell
The end of surrender-charge periods for individual fixed annuities could free more than $70 billion in cash to flow just about anywhere.
The new wave of maturities could hurt annuity issuers that are losing sales momentum and help the annuity issuers that are now hot, according to Bob Jiang Huang and other analysts at Morgan Stanley.
Some of the newly liberated cash could flow out of annuities altogether. But the analysts predict, in a new commentary posted behind a paywall, that much of the cash will become assets under management inside registered index-linked annuities.
Wink’s Moore on the Market: Not sure where Morgan Stanley got their information…LIMRA?
>>Five-year annuities were not the most prevalent duration sold in 2020. The three-year contracts were significantly more popular that year.<<
It seems that MS is suggesting that the money coming out of fixed annuity surrender charges is going to roll into new structured annuities/RILAs. I disagree.
>>Those who want principal protection will continue to flock to fixed and indexed annuities.<<
According to MS, many insurers are now avoiding issuing capital-intensive products; and have either stopped selling MYGAs and fixed indexed annuities, or found reinsurers…”
>>Wink, Inc. data does not suggest that insurers are getting out of fixed/indexed annuity sales at all. If anything, we have seen a large number of entrants, particularly startups, as it relates to the “capital-intensive” annuities.<< -sjm
