A $700 Billion Insurance Product Is Powering the US Credit Market Rally
- Annuity sales could total about $700 billion in next two years
- Funds likely to be allocated to corporate and structured debt
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An insurance product that consumers use to help fund their retirements is selling at record levels, powering demand for corporate debt and commercial mortgage bonds.
Last year, sales of annuities, which allow consumers to effectively buy income for the rest of their lives, reached an all-time record high of $385 billion, according to life insurance trade group Limra. That’s up 23% from the year before. The products grew more attractive as rising interest rates translate into higher potential annual payouts from the products.