Newsflash: This does not bode well for the 1035 activity, fellas/ladies.
February 28, 2023 by Sheryl J. Moore
Recently I’ve been hearing A LOT of chatter from insurance agents that are replacing a certain indexed annuity, with a surrender charge that extends beyond 15 years.
Turns out, the insurance company underwriting this particular annuity has recently slashed their inforce renewal rates/caps/pars.
Dramatically.
This has put many an insurance agent in the position to 1035 exchange these annuities, as the indexed POTENTIAL on this contract is now less than the rates that are being guaranteed on three-year MYGAs.
(You read that right.)
And note that this is only POTENTIAL, or the best case scenario for these annuities.
Which, incidentally, still have years of surrender charges remaining on the contracts.
Fast forward to this afternoon, when I was reading through insurance companies’ earnings calls transcripts.
***I gotta tell you- some of these insurance companies are either delusional or full of it.***
I read the earnings call of the insurance company with that double-digit surrender charge annuity. Curiously, they reported higher surrenders than the prior quarter.
Whaddaya know about that??
The C-Suite for said insurer downplayed the company’s surrenders, indicating that they expect the level of surrenders to stabilize.
Let me get this right-
Long surrender charges.
Reduced inforce renewal rates/caps/pars.
Increasingly-attractive rates on short-term products.
Newsflash: This does not bode well for the 1035 activity, fellas/ladies.
Look alive. The stockholders are watching. -sjm
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