U.S. Annuity Issuers Have a Firm Grip on the Assets: S&P Global

They're predicting overall life, annuity, and accident and health premiums and annuity considerations will increase just 0.41% in 2025, down from 12.83% this year, simply because the economy is cooling, interest rates are starting to fall and expecting the companies to maintain recent growth levels seems to be unrealistic.

The analysts also use the analytical resources of a sister company, IHS Markit, to address an often-asked question: How well are the issuers prepared to cope with a "run," or a sudden rush by customers to get cash out of their annuities?

The analysts found that issuers were using surrender charges, market-value adjustments for cash taken out early, and similar provisions to lock in about 82% of individual annuity assets and 90% of group annuity assets.

Only a tiny sliver of the assets will emerge from those constraints this year.

Life and annuity issuers have also been cautious about keeping product-related risk on their own books.

The amount of reserves on their books increased by $173 billion between 2022 and 2023, to about $4.6 trillion.

But the issuers held the total, industrywide increase in their own reserves to about $28 billion, by ceding about $145 billion in reserves to reinsurers, according to calculations based on the issuers' annual statements.