Equitable is facing more competition in the registered index-linked annuity market.
The new RILA competition is lowering the high internal rates of return that Equitable could earn on RILA contracts when it had that market all to itself.
And the new competition is fine, company executives told securities analysts Wednesday, during a conference call the company held to go over results for the second quarter, which ended June 30.
"If you look at the basic demographics, 4 million Americans turn 65 this year, and will do that next year as well," according to Mark Pearson, the chief executive officer of Equitable Holdings, the parent of both the Equitable insurance business and the AllianceBernstein asset management business. "There's something like $600 billion of flows coming out of the 401(k) market. It's a very attractive market. That's why a lot of competitors are going in there."
Executives at annuity market competitors like Corebridge and Jackson are also talking this week about the strength of the retirement annuity market.
What it means: Clouds might hang over other financial services sectors, but the CEOs of the big U.S. annuity writers see no sign that much rain will fall on sales any time soon.
Equitable: Equitable executives emphasized that its RILA contracts continue to be very profitable.
The company can still earn IRRs over 15% on the RILA contracts it's selling now, and sales of new RILA contracts increased about 9% between the second quarter of 2024 and the latest quarter, to $3.8 billion, executives said.
Meanwhile, annuities as a whole still account for only about 10% of the U.S. retirement market.
Corebridge Financial: At Corebridge, "we're very pleased with conditions in the second quarter," CEO Kevin Hogan said. "Demand for annuities remains robust across the board."
The difference between what Corebridge pays the annuity owners and what it can earn on its own investments is still attractive, Hogan said.
Moreover, although competition is intense, "we've determined the rationality of the competition based on our ability to achieve our margins on new business sales," he said.
Jackson Financial: Jackson's retail sales increased 9%, year-over-year, to $4.4 billion, even though RILA sales fell slightly, to $1.4 billion, because fixed annuity sales increased $470 million, from just $85 million in the year-earlier quarter.
"We are confident in our ability to sustain this positive momentum throughout 2025," Jackson CEO Laura Prieskorn said.
What Athene's parent sees: At Apollo Global Management, the parent of Athene, "we have a massive need for assets in the U.S. as a result of Athene," according to Marc Rowan, Apollo's CEO.
Apollo needs to find companies and people that can use capital to create the investments that help support some of the torrent of annuities Athene is writing every quarter, Rowan said.
Apollo sees plenty of demand for annuities at Athene and is simply deciding how much annuity-writing capacity Athene can use, given the amount of suitable investment assets available, Rowan said.
"We had projected some $70-plus billion of new inflows for the year for Athene," Rowan said. "We're in the 40s already."
Whether Apollo lets Athene exceed the original $70 billion goal will depend on Apollo's ability to earn investment spread on the assets backing the annuities, he said.
Credit: Don Bayley/iStock
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.