What Do Annuity Companies Invest In?

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Hi there, Stan the Annuity Man,

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America's annuity agent, licensed in all

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50 states in Puerto Rico. Founder of CGO

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contractual guarantees only. You own an

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annuity for what it will do, not what it

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might do, not hopes and dreams, because

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you're going to own the contractual

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realities. Question of the day is, what

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do annuity companies, life insurance

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companies that issue annuities, what do

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they invest in, Stan the annuity man?

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Well,

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there's a broad answer to that and then

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we'll get a little bit more detailed

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after this.

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So, life insurance companies, I always

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tell people they have the big buildings

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for a reason because they know when

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we're going to die as opposed to

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property and casualty companies that do

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not know when the hurricane is going to

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hit or the fire is going to happen, etc.

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um living on the coast of Florida some

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of the time. I can tell you right now in

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property and casualty companies come and

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go.

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Life insurance companies do not because

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they know when we're going to die and

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they price things accordingly. Um life

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insurance is a great investment. It's

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the best return on investment you'll

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never see because you're going to be

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dead. But what annu life insurance

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companies issue annuities. So, in

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essence, they're taking your money um

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and they know when you're going to die.

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So, they have to just invest it in very

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um safe bond type investments that's

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regulated by the National Association of

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Insurance Commissioners. They just can't

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take your money and go crazy with it. I

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always say life insurance companies

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aren't smarter than banks from an

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investing standpoint. They're just more

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handcuffed regulatory wise. Now, um, the

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annuity companies have to report what

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they're investing in. They have to be

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very transparent, not only to the

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shareholders, but to the the National

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Association of Insurance Commissioners,

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each state insurance commissioner um,

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oversees the fixed annuity products. Um,

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they also have some oversight a little

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bit on the other products, but the other

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products I'm talking about that are more

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SEC, FINRA based are variable annuities

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and registered index linked annuities.

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And those carriers have to be very

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transparent as you can only imagine

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because annuities

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are confidence products. You're

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transferring the risk to primarily solve

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for four things. The acronym I use is

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pill. P stands for principal protection.

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I stands for income for life. L stands

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for legacy. Other L stands for long-term

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care. Um those that's it. Okay. Now, the

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annuity companies are on the hook to be

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honest with what they are reporting to

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the to the carrier to the uh insurance

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commissioner and the oversight people

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that look at that. We've had a couple

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inst instances um one recently about

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five years ago check the time of this

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taping where the the investments that

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were being reported that they were doing

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they weren't happening. Okay. So the

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insurance um the national association of

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insurance commissioners and the state

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guarantee fund overtook that company

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because of that and everybody got their

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money back. But they I mean this is

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serious. Okay. One of the reasons that I

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chose to come from the security side to

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the life insurance business side with

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annuities is I believe that this is the

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bestrun

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category from an oversight standpoint,

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from a safety standpoint, and where

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you're going to put your money. And with

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15,000 people hitting age 65 every

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single day, um it's very important that

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you know that your money is safe. Now,

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with lifetime income products, it's A+

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or better. we go A+ or better and then

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choose the highest number after we quote

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all carriers for you. And then

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multi-year guarantee annuities, which is

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CD annuities. I personally look

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underneath the hood and make that

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recommendation because we're dating that

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company, not marrying them like we are

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with with um lifetime income products.

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So just think of think of very

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investment grade bond type portfolios

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that life insurance company and annuity

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companies invest in. Um, one of the

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things that's come up here recently is

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you're getting a lot of private equity

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companies um that are involved in the

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annuity space and there's been some

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articles about private credit being part

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of the portfolio and some alternative

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investments and we are seeing some of

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that with some of the bigger um hedge

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funds and private equity companies that

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are getting into the annuity space. So

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they might have you know 50 companies or

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100 companies and one or two of them are

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annuity companies and it kind of gets

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grouped in but we are watching that and

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have been since 2021 that private credit

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story. It's an alternative investment.

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So we've seen some of the um hedge fund

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groups that are coming into the annuity

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space and you got to say well why are

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they doing that? Because it's a

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demographic title wave of people turning

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65 looking for guarantees. They're

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trying to get in front of that. That can

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be both good and bad. Fortunately, in

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the annuity industry, it's so highly

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regulated that it's a good thing. Um,

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private equity companies and what I call

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masters of the universe, I think, were

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very anxious to get in this space. And

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then when they got here, they figured

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out they're not going to be able to do

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the things they want to do with that

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money and go, you know, be be as

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aggressive as they might like. You just

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cannot do that legally. And that's the

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reason there's a lot of stability in the

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annuity industry, in the life insurance

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industry. they're in they are investing

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in safe things. The reason is they don't

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need to make a lot of money on your

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money because you know let's just say

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they're they're they have a bill they

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have a billion dollars um in treasuries

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or corporates or mortgage back

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securities or whatever that's that's

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investment grade and they know when

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you're going to die. They just have to

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wait you out

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for lack of a better phrase. I mean,

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lifetime income products. They're

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looking at when you're going to die and

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they're pricing it accordingly and

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you're sharing the risk and pulling that

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risk, i.e. mortality credits with people

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of your same age. Which leads to one

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more thing. I think this is a good topic

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because what do they invest in? It's

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very important that you're choosing good

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companies because life expectancy tables

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will change against you in the near

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future because of artificial

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intelligence shortening that time frame

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for medical breakthroughs which means

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that the projections of your life

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expectancy will be longer which means

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there's going to be more payments which

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means those payments will be lower. I

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think right now we're at kind of old

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legacy um tables for life expectancy and

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they're a bargain. They're a bargain

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because it's not factoring in all of

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these medical breakthroughs. I'm reading

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stuff good stuff about the GLP1s and um

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you know pancreatic cancer research and

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breakthroughs that that have just really

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happened because of AI, not the GLP1s,

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but the cancer stuff is AIdriven. And I

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think you're going to see more and more

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and more of that, which is a good thing.

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But from a from a carrier standpoint, a

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safety standpoint, and I do think

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because of that, I have put my foot in

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the sand and my banner in the sand, and

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you're doing lifetime income, were A+ or

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better. And there are no exceptions to

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that. Period. End of story. My apologies

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to the carriers that aren't A+ yet. Um,

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and I hope I'm wrong about that, but I

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want to make sure that my clients money

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from lifetime income and what I call

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what call in the business tail risk, the

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ability to pay for as long as you're

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breathing, A+ or better, is always got

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to be there. But, um, my I guess one of

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the things I want to talk about at at

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the end of this is the NIC, the National

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Association of Insurance Commissioners.

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I'm also going to throw in the SEA SEC

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and NASD. They do a good job overseeing

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these companies and not letting them do

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something stupid with your money because

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they would if they were allowed. They're

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just handcuffed not to be stupid. Um,

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and that's a good thing about the life

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insurance industry, especially with so

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many people, you know, turning age

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65,000 a day looking for guarantees.

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All right. So I think you know I'm I'm

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very confident that the vast vast

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majority of my money is in is in the

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annuity space mostly in MAS. Um I I

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trust those carriers. I trust the people

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overseeing them. I tr I trust the whole

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thing because you're transferring the

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risk with annuities. You're transferring

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the risk to software principal

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protection income for life legacy or

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long-term care. For me I'm transferring

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the risk to software principal

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protection. And that's the legacy play

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for the family. The growth stock is me

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and my company, the annuity man, which

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you can't buy, but it's it's the best

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growth stock on the planet. The point is

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I'm transferring the risk to those

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carriers for those those interest rates

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that grow and compound tax deferred in a

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nonirra account. So I have I have faith

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in these companies and I have faith in

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the bigger companies within the industry

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to oversee the smaller ones and work in

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conjunction with the with the regulatory

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bodies to make sure that the golden

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goose of annuity confidence doesn't go

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away and that's very very important. Do

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me a favor, go to my site

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theanuityman.com. You can download my

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annuity owner owners manuals for free.

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You can schedule a call with me at your

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leisure. I will call right on the dot

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and I will listen to you. Um, you can

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email me stantheanuityman.com.

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Also, above my head, spending clock. I

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did a cool video on why people still

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hate annuities. Um, this is a re this

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video is kind of the reason you

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shouldn't because money's safe. There's

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a lot of oversight and a lot a lot of

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regulation behind the scenes to keep

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your money safe and to guarantee those

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lifetime income payments. But that video

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kind of covers why people still hate

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annuities and how the industry could

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truly solve it overnight if they wanted

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to. The first step is putting me in

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charge of everything. No, they don't

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have to do that, but if they just follow

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my instructions, people would um would

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love annuities like they love the other

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annuity they own called social security.

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It's amazing to me that we can have a

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group that we have the country love

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social security, the best inflation

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annuity on the planet, and somehow the

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annuity category is still hated. one of

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the biggest marketing disasters of all

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time that I personally am working on to

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solve putting out a video every single

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day until I drop dead on camera, which

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is kind of the goal, Dr. V. That's what

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we're looking for. So, if I grab my

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heart one day and it looks like I'm

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having a stroke, roll the camera. It's

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gold. It's It's video gold. All right.

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My name is Stan the Annuity Man. Thanks

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for listening. See you next time.