New York Life Annuities
One of the most recognizable names in the life insurance space is New York Life. The New York Life Insurance Company has roots dating back to 1845 when it was known as the ‘Nautilus Insurance Company’. Life insurance giant New York Life is also a major player in the annuity space through its subsidiary, New York Life and Annuity Corporation. This New York Life Annuities segment offers a wide variety of annuity options.
New York Life Annuities (Fixed)
New York Life is known for its income annuities and ranks #1 in terms of annual premium amounts, according to LIMRA. They ranked #3 overall among fixed annuites providers (as of Q2, 2016). New York Life also provides variable annuities, ranking 12th. Here are some of New York Life’s fixed annuity products:
- Clear Income Fixed Annuity- FP Series
- Secure Term Choice Fixed Annuity II
- Secure Term MVA Fixed Annuity II
The third annuity above includes an MVA on the annuity. Note that MVA stands for Market Value Adjustment. This ‘adjustment’ is made to your annuity balance if you withdraw an amount greater than the permitted withdrawal limits set by the insurer. You should remember that in a neutral or rising interest rate environment, the adjustment will be negative (i.e. cost you more money).
Keep in mind that fixed annuities also typically have a surrender charge. A surrender charge is a penalty on the withdrawal of money above a permitted amount. It is often steepest in the early years but progressively reduces over the surrender period. After the surrender period has ended, you are permitted to withdraw funds without a surrender charge (but there may be other charges). Insurance companies want to keep the money in house and sometimes go to great lengths to do so. If you are considering selling an annuity, there may be some firms that will reimburse you for these fees that you have been assessed by the annuity issuer.
New York Life Annuities (Income)
Certain New York Life annuities, such as their Guaranteed Income Annuities, offer a stream of payments for life. You purchase these through premiums paid, either as one lump sum or in periodic payments. New York Life also offers a variety of riders or add-ons that allow the income to pass onto heirs or beneficiaries.
- Guaranteed Future Income Annuity II
(This annuity is what is often referred to as a personal pension).
- Guaranteed Lifetime Income Annuity II
- Guaranteed Period Income Annuity II
Credit Ratings for New York Life Annuities
These ‘guarantees’ are only as good as the claims paying ability of the life insurance company. According to New York Life Investments website, they currently have the following credit ratings from major agencies:
Agency Rating Date of Latest Action
AM Best A++ (As of July 15, 2016)
Fitch AAA (As of March 29, 2016)
Moody’s Aaa (August 9, 2016)
Standard & Poor’s AA+ (July 20, 2016)
These credit ratings apply to both the parent company, New York Life Insurance Company and the New York Life Insurance and Annuity Corporation. Keep in mind, credit agencies typically rely on past data and have had instances where they were considerably late to the party in terms of instituting credit downgrades. The credit ratings may also be under review (for either an upgrade or downgrade) without that being displayed.
The investment portfolio of an insurance company is the ‘war chest’ that allows claims to be paid. Money comes in from premiums paid by customers, earns a return and then a portion gets paid out as claims. Many life insurance companies target somewhere around 55% as a payout goal. New York Life’s investment portfolio consisted of approximately 72.4% bonds, 12.2% mortgage loans and 4.9% Schedule B assets (this is more illiquid investments such as real estate, private equity and hedge fund interests). This data is according to a July 2016 report from credit rating company A.M. Best, publicly available on New York Life’s website.
Like most life insurance annuity companies, New York Life attempts to manage the assets and liabilities which is why the fixed income portion is so high. Rising interest rates should have a detrimental effect on the value of their bond portfolios. To their credit, they have a lower than average exposure to junk bonds and a lower than average duration (roughly 8.5 years) which makes them slightly less sensitive to interest rate moves than most.
New York Life, in particular, has large exposure to the private equity space (in 2015 it was 18.6% relative to total capital, according to a note by A.M. Best). These investments have high fees and can be extremely illiquid in times of financial distress. Life insurance companies could get to a point where their ability to pay out claims and meet the specified financial obligations of annuities and structured settlements is strained.
Selling An Annuity from New York Life
There are a number of third-party annuity buyers who actively purchase annuities from holders. The transaction is typically completed with a one-time lump sum payment for the future rights to the annuity payments.
Since the payment is being made in the present, the amount will be a discount to the total annuities payout amount. Many people simply want the flexibility of a one-time lump sum payment to meet unforeseen expenses or just don’t want to wait for their money. Often times, these are people who inherited the annuity or feel the annuity is no longer necessary for its original goal. If you fall into this category consider getting a free quote to see how much money you can get by selling your annuity.