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Obama Administration Promotes Fixed Annuities; Insurers Could Benefit

By Carrie Burns, Insurance Networking News
February 12, 2010
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After The New York Times ran a story about the Obama administration promoting the use of fixed annuities to help middle-class savers in defined contribution (DC) plans manage longevity risk, research and advisory firm Aite Group took a look at what this will mean for insurers.

While the government promotion does not necessarily mean mandating that annuities be used, it does impact insurers’ DC plan design, sales and asset retention. Insurers with large books of DC business, Aite Group says, are best positioned to quickly integrate and implement a program of automatic—or “test-drive”—annuities to take advantage of a possible uptick in interest.

The firm says ING, John Hancock, New York Life, MetLife and Principal Financial have strong existing networks of internal annuities wholesalers and service infrastructures, and could roll out and support such fixed annuity solutions.

Insurers with internally developed DC platforms, as opposed to those licensed from external software providers, may have an additional advantage, Aite Group says.