AM Best: Annuity Premium Growth Moderated in 2025

Why It Matters

The shift toward RILAs and product feature competition could reshape market share and profitability in the annuities market; if carriers boost bonuses or guarantees to win scarce flows, balance‑sheet risk and capital pressures could rise across the industry.

Summary

AM Best reports that registered index‑linked annuities (RILAs) were among the fastest‑growing US life‑insurance product segments in 2025, buoyed by higher caps, participation rates, guaranteed minimum accumulation and lifetime income features amid last year’s interest‑rate environment. Overall deferred and fixed annuity premiums were essentially flat, while fixed indexed annuities declined and indexed life products saw the strongest growth on the life side. Private‑equity asset managers remain heavily involved in the indexed annuity space and accounted for many of the fastest‑growing issuers despite aggregate declines. AM Best flags a looming risk: slower market growth and potential rate cuts could spur a benefits/features “arms race” that increases insurers’ risk exposure.

Original Description

Interest rate cuts and increased competition from other income-generating products have diminished annuity growth, according to a new Best's Special Report discussed by Jason Hopper, associate director, AM Best.

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