Iowa insurance man Curtis Cloke thinks he has solved the "annuity puzzle" by building ladders of deferred income annuities for his clients. Now he and his partners are scaling up his "Thrive" system and taking it national.
The variable annuity "arms race" is over, a victim of the equity crash, low interest rates, and the destructive effects of competition for market share - mainly among publicly held life insurers. Here's a three-part look at what has happened, why it happened, and what could happen next in the "living benefit" space.
Faced with capital shortages and ratings downgrades, the ranks of major publicly-held life insurers appears to be headed for consolidation. Historically low stock prices alone have made merger talk inevitable.
The financial world has left the “Harry Markowitz” era where Modern Portfolio Theory and Monte Carlo projections reigned, says Philipp Hensler, CEO of U.S. distribution for DWS Investments.
“If you buy a policy, you the policyholder get some of the upside, and guarantee you always get your premium back.” From a company’s perspective, “that’s poison,” Warren Buffett was quoted as saying.
Longevity insurance has been tough to sell, partly because of conflicts with Required Minimum Distribution rules. But Symetra says it has overcome that hurdle with its enhanced Freedom Income Annuity.