Fitch Publishes Special Report Examining the Fixed Index Annuity Market
From 2007 to 2014, sales of FIAs grew 93% while sales of other fixed annuities declined by 1% and sales of variable annuities (Vas) declined by 24%. FIAs are now the second-largest segment of the annuity market behind VAs. During the first six months of 2015, FIA sales represented 21% of all annuity sales, up from 10% in 2007. One of the main drivers of the growth in FIA sales can be attributed to income riders. Since their introduction in 2006, income riders have become increasingly important in the sale of FIAs.
Fitch believes that increased competition brought on by new market entrants, the proliferation of income riders and greater product complexity has increased the risk profile of the FIA business. While the FIA business has historically generated more stable profit margins relative to traditional declared rate FAs due to greater crediting rate flexibility, the incorporation of income riders increases exposure to tail risk and adds ALM challenges.
The report also examines the current regulatory environment at both a state and federal level, statutory and GAAP reserving requirements, the impact of the entrance of private equity capital into the market and the introduction of hybrid annuities.
The full report 'Update on Fixed Index Annuity Market: Proliferation of Living Benefits Increases Risk' dated Oct. 23, 2015, is available at 'www.fitchratings.com' under 'Insurance' and 'Special Reports'.
Комментарии