Brighthouse Executive Expects RILA Market to Get More Competitive

Executives at Brighthouse Financial are predicting that competition in the market for registered index-linked annuities (RILAs) will continue to grow.

RILAs, which are sometimes called index-linked variable annuities, are variable annuities that tie crediting rates to the performance of investment indexes, not to menus of mutual funds.

Unlike issuers of non-variable indexed annuities, RILA issuers need not guarantee contract holders protection against investment-market-related loss of value.

Myles Lambert, the chief distribution and marketing officer at Brighthouse, told securities analysts Wednesday that the RILA market has become more competitive over the past decade and that he now sees 19 insurers offering the product.

“I personally expect to see that this category will become even more competitive over time,” Lambert added. “It’s not just the insurers that are backed by alternative investment shops. It’s really across the board.”

What It Means

Tying an annuity’s investment option menu to indexes, rather than to funds, can help reduce an insurer’s investment management costs and increase the insurer’s ability to use derivatives to manage risk.

The flexibility of the product for insurers may tilt the annuity playing field in their favor for years to come.

The Earnings

Brighthouse held a conference call with securities analysts to go over earnings for the second quarter.

The company’s adjusted earnings figures exclude fluctuations in the value of benefits promises and derivatives.