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Retirement Planning > Retirement Investing

Is alternative capital creating new roads in retirement?

By Daniel Williams

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According to a new study by Conning, the life-annuity industry has seen changes afoot in the form of alternative capital.

The Conning study, “The Retirement Market Attracts New Entrants: Alternative Capital Moves In,” reveals that investment firms have been acquiring annuity businesses over the past few years.

“We have seen the retirement industry reshaped by asset manager purchases of annuity players over the past few years,” said Scott Hawkins, analyst at Conning. “As many traditional life insurers looked to exit annuity businesses following the financial crisis, these alternative capital players have been making big bets by acquiring those assets. In our research, we sought to understand whether these firms see something in the retirement market that others have missed, or whether perhaps they expect to benefit from structural differences between their model and traditional life insurers.”

According to the study, Conning ”recaps and analyzes the market moves of the key alternative market players and their performance to date, and explores some possible strategies that may be driving this change.” In addition, the study provides profiles of the alternative capital players and their development to date.

“While it is early days yet for the alternative capital players, our analysis indicates some intriguing performance differences from traditional players,” said Steve Webersen, director of research at Conning.

“Insurers, other asset managers, and regulators have taken notice, and as they think about the competitive advantages that alternative capital may have in the market, they also must consider the strategies and timeframe of these players. Our analysis points to a number of factors, both long-term and short-term, that may affect the ability of alternative capital to progress further in entering the retirement market.”

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