At a glance
- The exposure sits in plain fixed-rate and fixed-indexed deferred annuities bought for promised three- to 10-year returns rather than lifetime income.
- Pechter said alternative-asset managers that have bought large stakes in life insurers sell structured, derivative-driven products partly to fund private-credit businesses with annuity revenue, a heavily leveraged structure he likened to a Jenga tower.
- For advisors, the product-type line is the practical distinction: fixed-rate and fixed-indexed deferred contracts fall inside the risk he describes, while lifetime-income payout annuities fall outside it.
Kerry Pechter, founder and editor of Retirement Income Journal, warned that annuity risk sits in fixed deferred annuities where private equity, private credit, insurance and reinsurance overlap, WealthManagement.com reported.
He said lifetime-income payout annuities fall outside the risk and are typically sold by established mutual insurers such as New York Life.
The exposure sits in plain fixed-rate and fixed-indexed deferred annuities bought for promised three- to 10-year returns rather than lifetime income.
Pechter said alternative-asset managers that have bought large stakes in life insurers sell structured, derivative-driven products partly to fund private-credit businesses with annuity revenue, a heavily leveraged structure he likened to a Jenga tower.
For advisors, the product-type line is the practical distinction: fixed-rate and fixed-indexed deferred contracts fall inside the risk he describes, while lifetime-income payout annuities fall outside it.
Reported by the Products & portfolios desk from WealthManagement.com. Published . Corrections