Jump to content

fixed annuities


Recommended Posts

Here is a product that pays you a fixed sum.  Not great if interest rates rise though (unless you are the insurer).


So this has me wondering, given the current low interest environment...


Does anyone on this board follow any companies where a substantial amount of their business is derived from providing fixed annuities?


This seems like the kind of business to get into when:

1)  interest rates are relatively low

2)  interest rates will go substantially higher.

3)  portfolio is positioned to expect a rise in rates


The idea of investing in such company has never occurred to me before -- I know nothing about this sector.  Just looking for means of profiting from potential rise in rates -- thinking of out of the money calls on such a company as a form of insurance.

Link to comment
Share on other sites

try Grest-West lifeco (GWO-t)

    and Manulife (MFC)


Great west is more stable, but I like Manulife better as an investment because of a much lower P/B ratio. MFC have screwed up by being too much exposed to interest rate and stock market.(good in a up market but not so good during the great recession) but believe they learned from their lesson. Going forward they want to lower their sensitivity to interest rate and stock market change. If one believe that interest rate will go higher in the future, it is problably better to have maximum exposure to interest rate but Manulife have investors that want reliable earnings and steady dividend. So by hedging more and showing a few quarters of steady earnings I believe investors will go back to this stock and pushing P/B higher.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Create New...