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Securities analysts are starting to ask executives at life insurance and annuity issuers about the possibility that interest rates could continue to fall.
Questions about falling rates came up Tuesday, when executives from Corebridge Financial held a conference call to go over results for the fourth quarter of 2025 with the analysts.
Marc Costantini, the company's chief executive officer, said the company watches interest rates carefully.
"We're very responsive to the rate environment," Costantini said. "That causes us to, obviously, course correct our pricing on our fixed annuities."
The company may shift some capital toward investment management services, he said.
"But we have something that few others have to rely on, which is incredible distribution," Costantini said.
The average age of Corebridge relationships with the company's top 25 distribution partners is about 25 years, and "more than 40% of the annuity sales came from products that have bespoke features tailored for each specific distributor," Costantini said. "With many partners, not only are they one of our top distributors, but we are one of their top manufacturers, commanding significant shelf space. I've competed against this distribution powerhouse in the past, and I can tell you how hard it is to replicate."
What it means: Like retirement savers and advisors, annuity issuer executives are trying to prepare for the possibility that interest rates could go down and stay down.
Corebridge: Corebridge holds the life and annuity operations that were once part of American International Group.
The company ranked third in terms of overall U.S. individual annuity sales in the first three quarters of 2025, with about $21 billion in new contract sales.
Interest rates and annuity issuers: Life and annuity issuers support their "liabilities," or benefits promises, with huge pools of investment assets.
Because of risk management concerns and U.S. insurance regulation strategies, the issuers tend to put most of their assets in bonds and other fixed-income investments, such as portfolios of mortgage loans. Because the issuers have liabilities that last a long time, they tend to buy the fixed-income assets and hold them to maturity.
When rates fall, that increases the price that the fixed income assets would get if the issuers sold the assets to other investors.
But falling rates reduce issuers' returns on newly invested cash.
Life and annuity issuers often try to use derivatives and other mechanisms to hedge themselves against changes in interest rates. They tend to prefer stable or slowly rising interest rates.
The earnings: Corebridge is reporting $814 million in net income for the latest quarter on $6.3 billion in adjusted revenue, compared with $2.2 billion in net income on $4.7 billion in adjusted revenue for the fourth quarter of 2024.
Adjusted pre-tax operating income for the full year, which excludes the impact of fluctuations in the value of the company's assets and benefit promises, fell to $3 billion, from $3.2 billion.
Individual retirement premiums and deposits for the fourth quarter fell 5%, to $4.3 billion. Sales of the company's relatively new RILA contracts increased to $474 million in the quarter, from $90 million.
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