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Stock Market Volatility Is Not How Wall Street Hugs Annuity Issuers

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The stereotype is that stockbrokers and mutual fund managers weep when stock prices fall, and annuity issuers and sellers get busy buying champagne and making sales.

Stocks and mutual funds leave investors with assurances that, in the past, the stock market has always eventually bounced back before. Right?

An annuity issuer has the privilege of being able to guarantee part or all of the customer’s account value.

But, of course, offering guarantees can be stressful.

In recent years, many life insurers have shifted toward the sale of products that limit their direct exposure to investment-related guarantees. In some cases, annuity issuers use index options and other derivatives to pass guarantee risk on to Wall Street investors.

Nevertheless, life insurers still shoulder some guarantee risk.

Here’s a look at some of what insurance company executives have been saying about market volatility over the past two weeks, during conference calls the insurers have been holding to go over first-quarter results — which, overall, have been fine.

(Image: Adobe Stock)