ECHOES OF 2008: ANNUITIES SURGE WHEN EQUITIES CRASH

March 18, 2020 by Steve Morelli

The past few weeks of dramatic news might sound eerily similar to the 2008 crash, but there are some key differences for annuities, as well as some positive similarities.

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Sheryl Moore, CEO of Wink, also said although this crisis has many similarities to the recession, the underlying financials are fundamentally different. Back then, FIA sales were so strong that some carriers had to stop selling for a while.

“That was a little different because capital was tight at the time,” Moore said. “There were huge capital constraints that really prevented companies from issuing much annuity business. And that’s not really an issue at this time, at least not yet.”

But one of the unusual features of this crash is a plummet not only in equities markets, but also in bond prices. That is odd because of the increased demand. So, that is creating a unique pressure on carriers that need safe investments to support reserves.

Moore said she is seeing many similarities to the last crash, such as the rate cuts.

“It’s very similar to 2008 from a product standpoint,” Moore said. “I’ve had companies dropping rates twice in the same day, over the past two weeks.”