Annuities

# Executive Summary * The annuities industry faces a pivotal year as declining interest rates are set to significantly depress sales of traditional fixed-rate products, forcing a rapid shift in product mix. * Demand is shifting towards Registered Index-Linked Annuities (RILAs) and Variable Annuities (VAs), favoring companies with strong product innovation and established platforms in these segments. * A powerful, long-term demographic tailwind—the "Peak 65 Zone"—provides a fundamental and growing source of demand for retirement income solutions, underpinning the industry's long-term health. * Technology has become a key competitive battleground, with leaders investing heavily in AI and digital platforms to boost efficiency and capture a growing share of sales, projected to reach 35% in 2025. * Financial performance is bifurcating, with revenue growth and profitability increasingly dependent on a company's exposure to equity-linked products and its ability to manage spread compression. * Capital returns to shareholders remain a priority, with significant share repurchase programs and dividend increases common across the sector. ## Key Trends & Outlook The annuities industry is bracing for a significant demand shift in 2025, driven by the direct impact of declining interest rates on product attractiveness. LIMRA forecasts sales of Fixed-Rate Deferred (FRD) annuities to drop by 15-25% in 2025, from an estimated $160 billion in 2024 to $122-$147 billion, and income annuities by 10%, projecting sales between $16 billion and $18 billion. This directly compresses net interest margins and reduces revenue from spread-based products, which have been a primary growth driver in recent years. Conversely, this environment funnels assets towards equity-linked products; Registered Index-Linked Annuity (RILA) sales are projected to reach a record $62-$66 billion in 2025, and traditional Variable Annuity (VA) sales are expected to remain robust at around $60 billion. This creates a clear divergence, where firms with innovative RILA and VA offerings, such as Equitable Holdings, a pioneer in RILA products, are positioned to capture market share from competitors over-exposed to fixed products, as seen in MetLife's Q2 2025 PFOs decreasing by 6% year-over-year and Corebridge Financial's Q2 2025 premiums and deposits decreasing by 7% year-over-year. Despite near-term macroeconomic headwinds, the industry's fundamental outlook is supported by powerful demographics. In 2025, America's "Peak 65 Zone" will see an average of more than 11,200 individuals turn 65 each day, totaling approximately 4.1 million per year, creating an unprecedented wave of retirees. This growing cohort has a critical need for guaranteed income solutions to protect against longevity and market risk, ensuring sustained, long-term demand for annuity products. The primary opportunity lies in leveraging technology to more efficiently reach the growing demographic of retirees and to innovate hybrid products, like RILAs, that solve for both protection and growth in a volatile market. Digital platforms are expected to account for nearly 35% of all annuity sales in 2025, highlighting the importance of technological adoption. The key risk is margin compression and loss of market share for companies that fail to adapt their product mix away from traditional fixed annuities and cannot invest effectively in the digital platforms necessary to compete. ## Competitive Landscape The U.S. annuity market is highly competitive and somewhat concentrated, with Athene leading in 2025 with $34 billion in total sales, capturing an impressive 16.5% market share, followed by Jackson National with $31 billion and New York Life with $29.8 billion in fixed annuity sales. This forces other players to differentiate through specialized strategies and product innovation. Some insurers find success by deeply focusing on a specific customer niche. CNO Financial Group, for instance, explicitly targets middle-income pre-retiree and retired Americans, allowing it to build a defensible market position. This strategy is supported by a targeted agent force and technology like accelerated underwriting, which boasts an 89% instant decision rate, tailored to that segment's needs. Other major firms compete by building integrated financial services ecosystems. Equitable Holdings exemplifies this approach with its integrated business model, connecting Individual and Group Retirement with Asset Management (AllianceBernstein) and a proprietary Wealth Management channel (Equitable Advisors), creating a self-reinforcing growth loop. This model captures value across the entire client lifecycle, fostering stickier customer relationships and diversified revenue streams. A growing strategic trend involves asset managers leveraging insurance platforms to generate permanent capital. Brookfield Corporation is strategically evolving into an "investment-led" insurer, explicitly stating its goal to use insurance float to fund its long-duration real asset investments, projecting $25 billion in combined retail and institutional annuities for calendar year 2025 and targeting $200 billion in insurance assets. This creates a powerful, symbiotic relationship where the asset manager gains stable capital and the insurer gains access to higher-yielding, proprietary investments. The key competitive battlegrounds are product innovation in RILAs and the race to build more efficient digital distribution platforms. ## Financial Performance Revenue growth across the annuity sector is diverging, with performance directly tied to a company's product mix in the current interest rate environment. While some companies like Fidelity National Financial reported a 15.1% year-over-year increase in total revenue for Q2 2025, MetLife's Q2 2025 premiums, fees, and other considerations (PFOs) decreased by 6% year-over-year. Jackson Financial's results perfectly illustrate this split: its overall retail annuity sales grew a modest 4% year-over-year in Q2 2025, but this was powered by a 10% jump in RILA sales, masking weakness in other areas and leading to a 14.6% year-over-year decline in overall adjusted operating earnings. {{chart_0}} Profitability in the sector is diverging based on the underlying business model. Firms with strong, advice-driven wealth management platforms can sustain high, fee-based margins, while those more reliant on investment spreads are exposed to market volatility and rate compression. Ameriprise Financial's Q3 2025 adjusted operating margin of 52.8% exemplifies the high profitability of an advice-led, integrated model. This contrasts sharply with the earnings pressure seen at spread-reliant players like Brighthouse Financial, whose Q2 2025 adjusted earnings fell 42.8% year-over-year due to lower alternative investment income and higher claims severity. {{chart_1}} Capital allocation strategies reflect a mature industry balancing robust shareholder returns with strategic repositioning. Equitable Holdings demonstrates this balance perfectly, executing a $500 million debt tender offer and committing to $500 million in incremental share repurchases in H2 2025, while also agreeing to acquire Stifel Independent Advisors LLC to bolster its wealth management arm. This approach allows companies to return value to shareholders while making targeted investments for future growth and optimizing their business mix. {{chart_2}} The industry's balance sheets are generally strong and resilient. Most companies report RBC ratios well above the 400% target and hold significant excess capital or liquidity at the holding company level. Corebridge Financial is a representative example, with a Life Fleet RBC ratio above its 400% target and $2.4 billion in holding company liquidity. This strong capital adequacy provides flexibility to navigate economic volatility and fund capital return programs.