Annuity Winds Might Be Shifting: Nationwide Executive

By Allison Bell

News February 23, 2023 at 11:36 AM

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Soaring interest rates have been pushing U.S. sales of fixed annuities higher, and a top annuity issuer executive says he thinks conditions are right for a rebound in variable annuity sales later this year.

Eric Henderson, president of Nationwide's annuity unit, said in an email interview that relatively high interest rates could keep fixed annuity sales humming, and that investor hopes for a market rebound could help bring variable contract sales back up.

What It Means

Some clients who ran for cover just a few weeks ago might return to trying to buy low and sell high.

The Fixed Product Weather

Henderson noted that the U.S. 10-year Treasury bond yield seems likely to stay above 3.5%, even though it's down from a high of 4.24% in the fourth quarter of 2022.

"That means we are still very much in a market where fixed rate annuities rule," Henderson said.

The Variable Product Weather

Henderson said the same market ups and downs that are now hurting variable product sales could soon help them.

"When the market is high, annuities offer investors the opportunity to lock in gains, and when the market declines they have the chance to move into a vehicle that provides for a potential upside," Henderson said. "While the market has recently gone up, choosing an annuity now offers an investor the chance to get in while the market is lower relative to its high late in 2021."

Eric Henderson. (Photo: Nationwide)

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