2022 Focus Series: Group Annuities - Finding the Growth

Price : $999.00

The growth in premium and deposits within the group annuity line is likely to remain strong. For those seeking to understand that growth, this report should provide a solid foundation. For insurers that are looking to better understand these opportunities, this report should prove helpful in product development, strategic planning, and investment management.

Table of Contents:


Group Annuities Limited Competition, but Not Limited Growth

  • Three Products, Three Markets

  • Investment Products Growing Faster Than Annuities

  • A Heavily Concentrated Market Limiting Competition

  • Are There Growth Opportunities?

The FHLB Contribution to Group Annuity Asset Growth

  • What Is the FHLB?

  • The Increasing Use of FHLB Funding Agreements

  • Rating Agency/Regulator Perspectives Favorable for Continued Growth

  • FHLB Funding Agreement Capital Charges Improve

  • Room for Growth?

  • Is the FHLB Program for Everyone?

Insurers SECURE New Group Annuity Opportunity

  • SECURE Act Passage Opens New Group Annuity Market

  • A Trillion-Dollar Opportunity with Strong Consumer Interest

  • A Trillion-Dollar Opportunity with Strong Consumer Interest

  • Two Product Paths Forward

  • Still Work to be Done

The FABS Market Opportunity

  • Funding Agreement, the FABS Foundation

  • From Funding Agreement to FABS

  • A Growing FABS Market Attracting New Entrants

The Group Annuity Growth Outlook … Is There Enough Capital?


Looking from the outside, the group annuity line of business appears to have limited growth opportunities. Competition is limited, with the line being dominated by the largest insurers. The institutional products that account for most of the premium and deposits are significantly different from the individual annuities sold by smaller insurers. At the same time, overall premium and deposit growth is strong, which in other circumstances would attract new competition.

Group annuities are products that insurers offer primarily to qualified retirement plans. The product line includes pure investment products, such as GICs, as well as annuity products similar in design to individual annuities. Group annuities are key products purchased by defined benefit plans as part of their pension de-risking strategies.

Conning’s analysis of the group annuity line found three distinct growth opportunities:

  • The most widely available would be continued growth in FHLB (Federal Home Loan Bank) funding agreements.

  • The enactment of the SECURE (Setting Every Community Up for Retirement Enhancement) Act at the end of 2020 has opened the door for the inclusion of annuity-like solutions within the $9 trillion DC (defined contribution) market.

  • An outcome of the combination of equity market volatility, auto-enrollment in DC plans, the increased use of QDIAs (qualified default investment accounts), and the increase in LDI (liability-directed investing) has created a demand among institutional investors for stable value products such as GICs and funding agreements.