Would you trust a B++ MYGA?

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relativeratio
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Would you trust a B++ MYGA?

Post by relativeratio »

How about an A- for 5 or 7 years? An A rating seems like a really good rating until two years into the contract it becomes an A-, and then a B++ and then receivership!! :oops:

I realize I need to purchase a MYGA based on their claims paying ability and not count on my state bailing them out. I wish I knew more about various rated insurance/annuity companies probabilities of failure. Does anyone know where to find this information? I checked Weiss ratings site and my state's insurance commissioner's site but it's difficult getting the information I want from those sites.

If you were to hypothetically put $300k into 4 different MYGAs (total 1.2 mil). What is the minimum rating you would go with? How would you structure it? Would you bypass a 4.6% rate because the company is rated B++?
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Re: Would you trust a B++ MYGA?

Post by BarbK »

Stinky is the expert on all MYGA so hopefully he will chime in.

For 1.2M over a period of 5-7 years, I would go between $200K-$225K each, so instead of 4, I would have 5-6 MYGAs with separate companies unless they were A+ or A++. Most state guarantees are $250K so I would want to be beneath that counting a few years of interest.

Last year when rates were really low, I ended up buying an A- .Recently I had some mature MYGAs that were 1035 exchanged or cashed out. I ended up with 5 MGYAs, 3 companies were rated A+, 1 company that I purchased 2 with different time frames was rated A but I thought it was a strong A.

The longer the time frame, the higher the rating I want.

https://www.immediateannuities.com/insu ... y-ratings/ On the link, I look at the Assets, Capital&Surplus, % to liabilities.
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Re: Would you trust a B++ MYGA?

Post by Stinky »

Personally, if I were going out 5-7 years on a MYGA, I would tend to stay in the A- or higher range as rated by AM Best.

I would definitely keep the accumulated amount of the MYGA to be less than my state guaranty fund limit as the contract grows. Many states limit annuity coverage to $250k of surrender value. If that’s the case for you, I’d limit the purchase to $200k per company, which should keep the value below $250k as the MYGA grows and matures.

The rating agencies have put more time and effort into analyzing the insurance companies and their ability to pay claims than an individual ever could. I’ve seen the rating agency process from the inside. It’s not perfect, but it is a reasonably good predictor of financial stability for the period of time of a typical MYGA.
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relativeratio
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Re: Would you trust a B++ MYGA?

Post by relativeratio »

Thank you Barb and Stinky,

Your advise is well taken. I will stay well within my state's guarantee limit and go with 200k per company. Due to interest rates changing some advisors recommend going with five years or less. How do you feel about locking in a couple of contracts with a higher rate at a 7 year term? North American is 4.4% at 7 years but only 4.25% at 5 years. It is an A+ company. Nationwide is also an A+ with a 7 year rate of 4.25% while only 4.05% at 5 years.

I am thinking North America and Nationwide for seven years. Reliance Standard A++ 4.05% and Mutual of Omaha A+ 4.15% for five years.

I'll go out on a limb with Canvas B++ 4.6% for 3 years.

The final 200k I am thinking about keeping at traditional TIAA, totally liquid fund that will pay 2.8% until the end of Feb 2022 and then adjust. I won't touch this money for just over two years so I could put it into the MYGA ladder as well.

Brighthouse has an A rating and a 3 year term of 3.9% while Oceanview A- has a 2 year 3.5% rate.

I've read that Insurance company ratings are usually pretty stable and don't typically change over night. If a company is experiencing problems, it will ordinarily take several years before it would need an intervention. I've also read that Weiss credit ratings are more predictive of which companies will go into receivership.
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Re: Would you trust a B++ MYGA?

Post by Stinky »

relativeratio wrote: Mon Aug 15, 2022 2:10 am Thank you Barb and Stinky,

Your advise is well taken. I will stay well within my state's guarantee limit and go with 200k per company. Due to interest rates changing some advisors recommend going with five years or less. How do you feel about locking in a couple of contracts with a higher rate at a 7 year term? North American is 4.4% at 7 years but only 4.25% at 5 years. It is an A+ company. Nationwide is also an A+ with a 7 year rate of 4.25% while only 4.05% at 5 years.

I am thinking North America and Nationwide for seven years. Reliance Standard A++ 4.05% and Mutual of Omaha A+ 4.15% for five years.

I'll go out on a limb with Canvas B++ 4.6% for 3 years.

The final 200k I am thinking about keeping at traditional TIAA, totally liquid fund that will pay 2.8% until the end of Feb 2022 and then adjust. I won't touch this money for just over two years so I could put it into the MYGA ladder as well.

Brighthouse has an A rating and a 3 year term of 3.9% while Oceanview A- has a 2 year 3.5% rate.

I've read that Insurance company ratings are usually pretty stable and don't typically change over night. If a company is experiencing problems, it will ordinarily take several years before it would need an intervention. I've also read that Weiss credit ratings are more predictive of which companies will go into receivership.
I think that your plan sounds just fine.

Deciding at what duration to invest is a personal choice. I’m in the process of purchasing a couple of MYGAs and have decided to keep them shorter (3 years and 5 years), but there’s nothing at all wrong with what you’re proposing.

I ageee that rating agencies attempt to be forward-looking in their views on insurance companies. If you read a detailed rating agency report on a company, you’ll see that they look a lot more deeply than just understanding how well capitalized an insurance company is. Their intent is to “peg” a company’s rating correctly, and change it only rarely as a company’s situation changes.

I believe that ratings from the major general rating agencies (S&P, Moody’s, Fitch) and AM Best are much more thoughtful, and therefore useful, than ratings from Weiss. In my experience, each of the first four agencies do a “deep dive” into the company, with significant data calls and meetings with company management to fully understand the company, it’s strategies and capabilities, using significant non public data. On the other hand, Weiss uses a superficial process that does not go beyond public data. I personally put zero stock in ratings from Weiss.
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Re: Would you trust a B++ MYGA?

Post by samsoes »

Don't mean to hijack the thread, but what is the difference between a MYGA and a SPIA?
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Re: Would you trust a B++ MYGA?

Post by nisiprius »

I would not consider anything less than a rating in the A range. A few year ago I did a bit of looking around and found out that roughly three quarters of all insurance companies get ratings in the A range--I checked a couple of the agencies, I forget which. With all of the companies in the A's, I think life is too short to fiddle around with anything lower.

I think it is important to familiarize yourself with the nature of the limited protection you get from your state guaranty association. This is especially true if you are going to use one with a low rating. By the way, this is exactly what insurers don't want you to do--find out about the guaranty associations.

Since insurance is state-regulated, the limits on the amount of protection and the exact provisions of the law vary by state. The place to find out is:

http://www.nolhga.com
>> Policyholder information
>> Find your guaranty association
>> [Choose your state association] Go
>> FAQs

The guaranty assocation protection is weird. You will notice that it is not "insurance." They make a point on the website of calling it a "safety net." It is not analogous to FDIC deposit insurance. They provide protection if your insurance company becomes insolvent, but each event is happened case-by-case, and the laws give them a lot of discretion on exactly what they do.

When I say the insurance companies do not want you to know about the guaranty associations, that's not a cynical statement, it's literally true. The laws prohibit insurance companies from advertising guaranty association protection, or using it as an "inducement to buy." Every bank ad has a little FDIC logo somewhere, but insurance company ads never mention the guaranty associations, and insurance agents are very reluctant to tell you about it.

They want you to think that your only protection is the financial strength of the insurer, and that you are completely exposed if the insurer folds. The truth is that you do have some protection.

However, the guaranty associations are not state agencies. The state's involvement is usually that belonging to the guaranty association is a requirement for selling insurance in the state. And the guaranty associations don't have their own pool of cash to draw on. When an insurer becomes insolvent, the other insurers effectively pass the hat. I've read that a common resolution is for another insurer to take over the policies of the failed insurer. They aren't required to duplicate the terms and conditions exactly.
Last edited by nisiprius on Mon Aug 15, 2022 5:37 am, edited 3 times in total.
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Re: Would you trust a B++ MYGA?

Post by Chardo »

samsoes wrote: Mon Aug 15, 2022 5:23 am Don't mean to hijack the thread, but what is the difference between a MYGA and a SPIA?
A SPIA provides income starting immediately. A MYGA is essentially like a CD. Income is deferred to some future date, or not taken at all.
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Re: Would you trust a B++ MYGA?

Post by Zosima »

According to AM Best, a B++ financial strength rating results in a 1.45% default rate over a 3-year period and a 4.29% default rate over a 10-year period (no 5 or 7 year period were available but an extrapolation could be a rough approximation) (see link below, free registration may be required).

https://ratings.ambest.com/DisclosurePD ... MBNum=7358

How this data affects the decision to invest in a B++ MYGA will vary by indvidual but I am personally comfortable investing in a 5-year MYGA with a B++ company (within the limits of the state guaranty association). Part of my analysis is that my personal mortality rate (mid 50s) over that five year period is higher than the chances of default (which I recognize is not necessarily a logical comparison but it puts the risk in perspective for me).
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Re: Would you trust a B++ MYGA?

Post by Stinky »

samsoes wrote: Mon Aug 15, 2022 5:23 am Don't mean to hijack the thread, but what is the difference between a MYGA and a SPIA?
Both are contracts issued by a life insurance company, and both have the word “annuity” as part of their name. The similarities pretty much end there.

A SPIA provides a stream of payments (usually monthly) for a period of time. Often the payment horizon is the annuitants lifetime, but it may be just for a set number of years like 5 or 10. Once a SPIA is purchased, it’s usually not possible to change the payment stream or to get a “lump sum” amount out of the contract.

On the other hand, a MYGA is somewhat similar to a CF issued by a bank. In exchange for a premium payment up front, the insurance company promises a fixed rate of interest for a fixed period of time. At the end of that time, the annuitant can take the accumulated money, or roll into a new MYGA or other annuity. The contract can also be surrendered prior to its maturity, subject to high surrender charges.

This is not a complete description of either product. Post back with questions.
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Re: Would you trust a B++ MYGA?

Post by BarbK »

relativeratio wrote: Mon Aug 15, 2022 2:10 am Thank you Barb and Stinky,

Your advise is well taken. I will stay well within my state's guarantee limit and go with 200k per company. Due to interest rates changing some advisors recommend going with five years or less. How do you feel about locking in a couple of contracts with a higher rate at a 7 year term? North American is 4.4% at 7 years but only 4.25% at 5 years. It is an A+ company. Nationwide is also an A+ with a 7 year rate of 4.25% while only 4.05% at 5 years.

I am thinking North America and Nationwide for seven years. Reliance Standard A++ 4.05% and Mutual of Omaha A+ 4.15% for five years.

I'll go out on a limb with Canvas B++ 4.6% for 3 years.

The final 200k I am thinking about keeping at traditional TIAA, totally liquid fund that will pay 2.8% until the end of Feb 2022 and then adjust. I won't touch this money for just over two years so I could put it into the MYGA ladder as well.

Brighthouse has an A rating and a 3 year term of 3.9% while Oceanview A- has a 2 year 3.5% rate.

I've read that Insurance company ratings are usually pretty stable and don't typically change over night. If a company is experiencing problems, it will ordinarily take several years before it would need an intervention. I've also read that Weiss credit ratings are more predictive of which companies will go into receivership.
Another thing to verify is if they allow the 10% free withdrawal. Who know what will happen with interest rate. I ignored North America because they only allowed interest for withdrawing.

I went with Brighthouse for 3 and 5 year. Rate is the same as when I purchased around 7/4/22
My other MGYAs were :
Lincoln (whose rate has come down a lot since I purchased in July ; this was a 1035 exchange also from Lincoln. I don't think it is competitive right now.
USAA - also a 1035 exchange, but unfortunately has lowered their rates a lot since my purchase. Five years.
Nationwide - I went on a limp and did 7 years.
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Re: Would you trust a B++ MYGA?

Post by Stinky »

Zosima wrote: Mon Aug 15, 2022 6:27 am According to AM Best, a B++ financial strength rating results in a 1.45% default rate over a 3-year period and a 4.29% default rate over a 10-year period (no 5 or 7 year period were available but an extrapolation could be a rough approximation) (see link below, free registration may be required).

https://ratings.ambest.com/DisclosurePD ... MBNum=7358

How this data affects the decision to invest in a B++ MYGA will vary by indvidual but I am personally comfortable investing in a 5-year MYGA with a B++ company (within the limits of the state guaranty association). Part of my analysis is that my personal mortality rate (mid 50s) over that five year period is higher than the chances of default (which I recognize is not necessarily a logical comparison but it puts the risk in perspective for me).
Thank you for the link. I believe that the chart you're referring to is on page 6 of the report.

I'm also going to post this in the "Purchasing MYGAs" thread.

Note that the an insurer "default event" does not imply a loss to the policyholder in the same magnitude. Many policyholders recover all of their money from a "defaulting" insurer, but there may be delays in recovering all funds. Absent total theft and/or fraud by the employees or owners of the insurer, the insurer will have some funds available to it to satisfy immediate claims. And insurance guaranty funds will kick in over time to compensate policyholders up to the guaranty fund limit.

I rather liked your analogy of insurer default risk to your mortality. However, the comparison is less than perfect. With insurer default, there is likely less than 100% loss of funds, while with your death, there is 100% mortality. :D
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Re: Would you trust a B++ MYGA?

Post by Zosima »

Stinky wrote: Mon Aug 15, 2022 7:37 am With insurer default, there is likely less than 100% loss of funds, while with your death, there is 100% mortality. :D
LOL! :)
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Re: Would you trust a B++ MYGA?

Post by relativeratio »

Zosima wrote: Mon Aug 15, 2022 6:27 am According to AM Best, a B++ financial strength rating results in a 1.45% default rate over a 3-year period and a 4.29% default rate over a 10-year period (no 5 or 7 year period were available but an extrapolation could be a rough approximation) (see link below, free registration may be required).

https://ratings.ambest.com/DisclosurePD ... MBNum=7358

How this data affects the decision to invest in a B++ MYGA will vary by indvidual but I am personally comfortable investing in a 5-year MYGA with a B++ company (within the limits of the state guaranty association). Part of my analysis is that my personal mortality rate (mid 50s) over that five year period is higher than the chances of default (which I recognize is not necessarily a logical comparison but it puts the risk in perspective for me).


Zosima, Stinky,

Page 6 of https://ratings.ambest.com/DisclosurePD ... MBNum=7358 was exactly what I was looking for. Thank you so much! Now I have a better gauge on what type of risk I might be taking.

Unfortunately, I haven't been able to figure out how to clip that table and post it as an image here.

Barb, I did notice that North American was interest only. I guess it would be a good option to be able to draw out 10% if interest rates continue to go up. I hadn't really thought of that. I was just looking to live off of the interest alone.
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Re: Would you trust a B++ MYGA?

Post by retireIn2020 »

Yes, State Guarantee is there however, I've been told that, if an insurance company goes into default, it could take time (even a couple years) for the state guarantee to take over/resolve the guaranteed amount. Since that's not the kind of headache I want for a few thousand dollars, I decided to only purchase MYGA's from insurance companies with a Comdex ranking of 90 and above.

AM Best is not the true story of insurance company rankings. For instance, Fidelity only deals with insurance companies ranked 95 and above.
Here's the link to the Comdex report (Scroll down to "Download".
https://www.stantheannuityman.com/comdex-rankings
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Re: Would you trust a B++ MYGA?

Post by Taylor Larimore »

Bogleheads:

Pat and I purchased a joint AVIVA SPIA in 2006.

In 2015 we received a letter stating that our AVIVA annuity had been taken over by the ATHENE Insurance company.

I do not know the details but the change-over was uneventful for us.

Best wishes.
Taylor
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Re: Would you trust a B++ MYGA?

Post by Stinky »

relativeratio wrote: Mon Aug 15, 2022 9:08 am Barb, I did notice that North American was interest only. I guess it would be a good option to be able to draw out 10% if interest rates continue to go up. I hadn't really thought of that. I was just looking to live off of the interest alone.
You could inquire whether North American has a rider available to increase the free partial withdrawals from interest only to 10%.

If they do have such a rider, I expect that it costs about 0.10% per year. The rider cost would be deducted from the credited rate.
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Re: Would you trust a B++ MYGA?

Post by prozario01 »

Thanks for this comdex info - i was not familair with it.

I've been looking into MYGA after reading about it in this forum. Aspida Life - which is offering the highest rate for 7 years - around 4.8% - is only 59 on Comdex Rating. This gives me a pause with Aspida!!

AMBest was A- rating for Aspida. What is now bothering me - no one rating agency has ratings for them.
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Re: Would you trust a B++ MYGA?

Post by Stinky »

prozario01 wrote: Mon Aug 15, 2022 2:08 pm Thanks for this comdex info - i was not familair with it.

I've been looking into MYGA after reading about it in this forum. Aspida Life - which is offering the highest rate for 7 years - around 4.8% - is only 59 on Comdex Rating. This gives me a pause with Aspida!!

AMBest was A- rating for Aspida. What is now bothering me - no one rating agency has ratings for them.
AM Best has made a business of rating insurance companies for many decades. Virtually every life insurance company has a rating from AM Best - even the smallest and newest. And AM Best does very little rating work outside of the insurance space.

By contrast, the three general major rating agencies (S&P, Moody's, and Fitch) have been in business for many decades, but only rating insurance companies since about the 1980's. Most of the life insurers rated by those three agencies are pretty large, mature companies.

Historically, many life insurers who sell in "retail" markets have been able to get adequate market penetration with only an AM Best rating. They haven't needed ratings from the three major agencies to help them peddle their products, and so they haven't engaged the major rating agencies to rate them. By doing so, those "retail" insurers also avoid the rating agency fees, which run into six figures annually for each of the rating agencies. There are a number of annuity companies that fall into this category.

By contrast, many companies that sell in more "advanced" markets find that they need ratings from the major agencies to compete effectively. "Advanced" markets might include things such as large permanent life insurance policies, variable life and annuities, guaranteed investment contracts, structured notes, etc. Also, if a life insurance holding company issues public debt that is rated by the major agencies, it's likely that the underlying life insurance company will be rated.

In the case of Aspida, it's essentially a start-up life insurance company, built on top of an existing base of legacy insurance policies. A new management team has come in to start up the annuity business, and they're getting attention in the market by offering very attractive credited rates. Whether or not they will continue to be a market leader in interest rates remains to be seen. They received their A- rating from Best only last April. At $2 billion in assets, they're not a large company by any stretch of the imagination. I wouldn't expect that they'd seek a rating from the major rating agencies for a while to come.

Hope this helps in your decision process. I have some degree of personal confidence in the AM Best rating process, but wouldn't criticize anyone who chose to not purchase from such a young, smallish, and narrowly-rated company.
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Re: Would you trust a B++ MYGA?

Post by welderwannabe »

relativeratio wrote: Sun Aug 14, 2022 8:55 pm How about an A- for 5 or 7 years? An A rating seems like a really good rating until two years into the contract it becomes an A-, and then a B++ and then receivership!! :oops:

I realize I need to purchase a MYGA based on their claims paying ability and not count on my state bailing them out. I wish I knew more about various rated insurance/annuity companies probabilities of failure. Does anyone know where to find this information? I checked Weiss ratings site and my state's insurance commissioner's site but it's difficult getting the information I want from those sites.

If you were to hypothetically put $300k into 4 different MYGAs (total 1.2 mil). What is the minimum rating you would go with? How would you structure it? Would you bypass a 4.6% rate because the company is rated B++?
I agree with nisiprius. Is this really where you want to take your risk? A or A+ only.
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Re: Would you trust a B++ MYGA?

Post by nisiprius »

In a decade or so of vaguely checking here and there... not only do the vast majority of insurance companies have ratings within the "A" range, but virtually all of them show ratings from four NRSRO's, almost always the same four: A. M. Best, Fitch, Moody's, and S&P. It's normal. It's usual. It's customary. For example, I have an SPIA from American General, a division of AIG, and AIG is showing ratings from those four.

When an insurer doesn't show ratings from all four of these agencies, I think it's at least a yellow flag.

What do we see from Aspida?

Source

Image

Where are Fitch, Moody's, and S&P? As for KBRA, I've never heard of them, and I've never before seen an insurer publish a KBRA rating.

Notice, too, that we are not seeing "positive outlook" from either agency?

Is this important? I don't know. No doubt KBRA is a "real" NRSRO, and no doubt Aspida has a plausible explanation for not securing ratings from Fitch, Moody's, and S&P. But it's odd. It just feels substandard.
Last edited by nisiprius on Mon Aug 15, 2022 6:38 pm, edited 1 time in total.
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Re: Would you trust a B++ MYGA?

Post by GibsonL6s »

Please also check out what the states guaranty fund actually covers in California it is not 100%. This has caused me to avoid MYGAs as Treasuries which as state tax free and risk free are about even with MYGAs on an after tax basis and of course highly liquid.
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Re: Would you trust a B++ MYGA?

Post by nisiprius »

relativeratio wrote: Sun Aug 14, 2022 8:55 pmIf you were to hypothetically put $300k into 4 different MYGAs (total 1.2 mil)...
Note that in most states there is not only a cap on each policy (per insurer per insured life), but there is usually an "aggregate cap" as well. The protection does not add up past the aggregate cap.

For example, here are the coverage limits for Michigan:
The MLHIGA Act limits the amount MLHIGA is obligated to cover for each
insolvent company as follows:
...(2) for any one life, regardless of the number of policies or contracts held with
the same company, MLHIGA will cover a maximum of: ...
(b) $250,000 in the present value of annuity benefits ...
(d) In no event is the association obligated to cover more than an aggregate of
$300,000 in all benefits (other than basic hospital, medical, and surgical
benefits) for any one life.
So under part d, if you have four policies with present values of $250,000, you don't have $1 million protected, you only have $300,000 protected.
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Re: Would you trust a B++ MYGA?

Post by Stinky »

nisiprius wrote: Mon Aug 15, 2022 6:32 pm
relativeratio wrote: Sun Aug 14, 2022 8:55 pmIf you were to hypothetically put $300k into 4 different MYGAs (total 1.2 mil)...
Note that in most states there is not only a cap on each policy (per insurer per insured life), but there is usually an "aggregate cap" as well. The protection does not add up past the aggregate cap.

For example, here are the coverage limits for Michigan:
The MLHIGA Act limits the amount MLHIGA is obligated to cover for each
insolvent company as follows:
...(2) for any one life, regardless of the number of policies or contracts held with
the same company, MLHIGA will cover a maximum of: ...
(b) $250,000 in the present value of annuity benefits ...
(d) In no event is the association obligated to cover more than an aggregate of
$300,000 in all benefits (other than basic hospital, medical, and surgical
benefits) for any one life.
So under part d, if you have four policies with present values of $250,000, you don't have $1 million protected, you only have $300,000 protected.
Here’s how I interpret the Michigan language, assuming I have four annuities with present values of $250k each -
—- If the annuities are with four different companies, I am covered for $250k for each annuity. Total coverage is $1 million amongst the four companies
—- If two of the annuities are with Company A, and the other two are with Companies B and C, I have just $250k of coverage if Company A goes insolvent. That’s the per company limit for annuity benefits. I also have coverage of $250k for each of Companies B and C. Total coverage $750k.

Here’s how the $300k limit comes into play. Let’s say that I have two policies with Company A - an annuity with $250k present value of benefits, and a life insurance policy with a surrender value of $100k. Each of the policies is within the guaranty fund limits for that coverage. However, if Company A went insolvent, my total claim would be maxed out at $300k due to the aggregate cap for all benefits within one company.
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retireIn2020
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Re: Would you trust a B++ MYGA?

Post by retireIn2020 »

prozario01 wrote: Mon Aug 15, 2022 2:08 pm Thanks for this comdex info - i was not familair with it.

I've been looking into MYGA after reading about it in this forum. Aspida Life - which is offering the highest rate for 7 years - around 4.8% - is only 59 on Comdex Rating. This gives me a pause with Aspida!!

AMBest was A- rating for Aspida. What is now bothering me - no one rating agency has ratings for them.
There are two rules for insurance company choice, and this mainly pertains to lifetime SPIA but considered for MYGA length of term.
1) Make sure it's a Mutual Company!
A mutual insurance company is owned by its policyholders, while a stock insurance company is owned by its shareholders and can be either privately held or publicly traded.
2) Understand their ability to cover catastrophic loss. For instance, New York Life has the funds cover all of their policies and have funds left over.

The reason we choose MYGA's and SPIA's is for the guarantee. I personally do not care to take any risk when I'm looking for a guaranteed rate of return.
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relativeratio
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Re: Would you trust a B++ MYGA?

Post by relativeratio »

retirein2020

I'm looking into your first rule:

1) Make sure it's a Mutual Company!

These are the companies I mentioned in my post:

North American A+, owned by Sammons Financial group (I believe this is a private company)
Nationwide A+ a mutual company
Reliance Standard A++ member of Tokio Marine Group which is Japanese company
Mutual of Omaha A+ a mutual company
Canvas B++ owned by Puritan
TIAA A++ a mutual company
Brighthouse A owned by Metlife, which went from being a mutual company to a publically traded company in 2000.
Oceanview A- owned by Oceanview

I will give the mutuals a closer look. Also, found your comdex ratings link helpful. Stan's site and videos has been very helpful to my MYGA education.

About my state's Insurance guarantee limits in NC

It's 300k per company and 300k aggregate. All the examples they site for coverage deal with one company with multiple policies. Stinky, I don't know if NC's coverage would work the way you think Michigan's coverage would work. Also, thanks for pointing out the rider for a 10% withdrawal rate. I wonder if rates go up, would I be able to transfer that 10% from one IRA to another or is it just considered a distribution?

Nisiprius, "When an insurer doesn't show ratings from all four of these agencies, I think it's at least a yellow flag."

I wonder about Americo because of this.

About KBRA ratings, I've see fraternal organizations such as GCU using a KBRA rating

https://gcuusa.com/pages/financial-reports

I wanted to go with them once but couldn't get past the lag of state guarantees.
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Re: Would you trust a B++ MYGA?

Post by Stinky »

relativeratio wrote: Tue Aug 16, 2022 5:24 am About my state's Insurance guarantee limits in NC

It's 300k per company and 300k aggregate. All the examples they site for coverage deal with one company with multiple policies. Stinky, I don't know if NC's coverage would work the way you think Michigan's coverage would work.
I believe that, in general, the “aggregate” limits are applied on a per company basis. So if I was to be unfortunate enough to purchase contracts from two companies that both went insolvent, I would have max coverage (in my case, $250k) for each company.

I’ve confirmed that with my state guaranty fund with respect to my situation.

If you have questions about how your state’s guaranty fund would work in practice, I suggest that you get in touch with them.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
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Re: Would you trust a B++ MYGA?

Post by relativeratio »

I called my state's Insurance Guarantee Commissioner Association and spoke with a customer service agent that could only state that they don't deal in hypotheticals and then read off the same information and examples regarding coverage of policies with one company and multiple policies.

She had no answer as to whether the guarantees would apply to up to 300k per company when dealing with different carriers. She referred me to an insurance agent to speak with. When I stated I thought that they weren't suppose to discuss the state guarantees, she wondered why they wouldn't be able to. I stated that I thought they were prohibited due to policy and that as a consumer I was only suppose to consider the claims paying ability of the company when speaking with them.

She referred me to the NC Life and Health insurance commissioner. I got their voice mail and left a message. Fat chance the executive insurance commissioner will call me back. I'll let you know if they actually do and the answer to my question.
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Re: Would you trust a B++ MYGA?

Post by Stinky »

relativeratio wrote: Tue Aug 16, 2022 8:10 am I called my state's Insurance Guarantee Commissioner Association and spoke with a customer service agent that could only state that they don't deal in hypotheticals and then read off the same information and examples regarding coverage of policies with one company and multiple policies.

She had no answer as to whether the guarantees would apply to up to 300k per company when dealing with different carriers. She referred me to an insurance agent to speak with. When I stated I thought that they weren't suppose to discuss the state guarantees, she wondered why they wouldn't be able to. I stated that I thought they were prohibited due to policy and that as a consumer I was only suppose to consider the claims paying ability of the company when speaking with them.

She referred me to the NC Life and Health insurance commissioner. I got their voice mail and left a message. Fat chance the executive insurance commissioner will call me back. I'll let you know if they actually do and the answer to my question.
Well, that’s most unhelpful!

And I doubt that the insurance commissioner will be much help. I expect that they’ll just kick you back to the guaranty fund.

I’m pretty much out of suggestions for you to get better assurance in your situation, beyond limiting your purchases to higher rated companies with lower risks of default, and keeping your maturities relatively short.

My belief in how my guaranty fund is rooted in how I’ve seen guaranty funds operate during my working years, my reading of the statute, and my contact with my state guaranty fund. I expect that your state guaranty fund would work the same way. But I can’t give you any assurance of exactly how the NC guaranty fund would work if you had two or more insurance company insolvencies.

Sorry to have hit a dead end for you.
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Re: Would you trust a B++ MYGA?

Post by nisiprius »

If you want to dig deeper, the NOLHGA website actually has a section with a summary of actual language from the state guaranty association laws. I chose the summary for North Carolina:
§58-62-21(d). The benefits for which the Association is liable do not, in any event, exceed the lesser of: (1) The contractual obligations for which the member insurer is liable or would have been liable if it were not a delinquent insurer. (2) With respect to any one life, regardless of the number of policies or contracts, three hundred thousand dollars ($ 300,000) for all benefits, including cash values. (2a) With respect to health insurance benefits for any one life, regardless of the number of policies: a. Three hundred thousand dollars ($ 300,000) for coverages not defined as health benefit plans. b. Five hundred thousand dollars ($ 500,000) for health benefit plans. (3) With respect to each individual participating in a governmental retirement plan established under section 401, 403(b), or 457 of the Internal Revenue Code covered by an unallocated annuity contract, or the beneficiaries of each individual if deceased, in the aggregate, three hundred thousand dollars ($ 300,000) in present value annuity benefits, including net cash surrender and net cash withdrawal values; or (4) With respect to any one contract holder covered by any unallocated annuity contract not included in subdivision (3) of this subsection, five million dollars ($ 5,000,000) in benefits, regardless of the number of such contracts held by that contract holder; or (5) With respect to any one payee (or beneficiaries of one payee if the payee is deceased) of a structured settlement annuity, one million dollars ($ 1,000,000) for all benefits, including cash values. (6) However, in no event shall the Association be obligated to cover more than (i) an aggregate of three hundred thousand dollars ($ 300,000) in benefits with respect to any one life under subdivisions (2) and (3) and sub-subdivision (2a)a. except with respect to benefits for health benefit plans under sub-subdivision (2a)b. of this subsection, in which case the aggregate liability of the Association shall not exceed five hundred thousand dollars ($ 500,000) with respect to any one life.
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relativeratio
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Re: Would you trust a B++ MYGA?

Post by relativeratio »

Stinky wrote: Tue Aug 16, 2022 8:51 am
relativeratio wrote: Tue Aug 16, 2022 8:10 am I called my state's Insurance Guarantee Commissioner Association and spoke with a customer service agent that could only state that they don't deal in hypotheticals and then read off the same information and examples regarding coverage of policies with one company and multiple policies.

She had no answer as to whether the guarantees would apply to up to 300k per company when dealing with different carriers. She referred me to an insurance agent to speak with. When I stated I thought that they weren't suppose to discuss the state guarantees, she wondered why they wouldn't be able to. I stated that I thought they were prohibited due to policy and that as a consumer I was only suppose to consider the claims paying ability of the company when speaking with them.

She referred me to the NC Life and Health insurance commissioner. I got their voice mail and left a message. Fat chance the executive insurance commissioner will call me back. I'll let you know if they actually do and the answer to my question.
Well, that’s most unhelpful!

And I doubt that the insurance commissioner will be much help. I expect that they’ll just kick you back to the guaranty fund.

I’m pretty much out of suggestions for you to get better assurance in your situation, beyond limiting your purchases to higher rated companies with lower risks of default, and keeping your maturities relatively short.

My belief in how my guaranty fund is rooted in how I’ve seen guaranty funds operate during my working years, my reading of the statute, and my contact with my state guaranty fund. I expect that your state guaranty fund would work the same way. But I can’t give you any assurance of exactly how the NC guaranty fund would work if you had two or more insurance company insolvencies.

Sorry to have hit a dead end for you.

Stinky,

Good news, The NC executive director of life & health insurance called back and answered my questions. Yes, the limits are per company in NC. So you could have four different policies with four different companies for $250k a piece and be covered. He also explained in detail the method that specifies the average interest rate they would use to reimburse within limits of a policy if it were to go into receivership. There were more details than I could remember while cooking breakfast. I do appreciate the call back and the answers I sought. I was impressed. I don't usually get that good a response to an inquiry from someone who is in the know. :D
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Re: Would you trust a B++ MYGA?

Post by Stinky »

relativeratio wrote: Tue Aug 16, 2022 9:24 am
Stinky wrote: Tue Aug 16, 2022 8:51 am
relativeratio wrote: Tue Aug 16, 2022 8:10 am I called my state's Insurance Guarantee Commissioner Association and spoke with a customer service agent that could only state that they don't deal in hypotheticals and then read off the same information and examples regarding coverage of policies with one company and multiple policies.

She had no answer as to whether the guarantees would apply to up to 300k per company when dealing with different carriers. She referred me to an insurance agent to speak with. When I stated I thought that they weren't suppose to discuss the state guarantees, she wondered why they wouldn't be able to. I stated that I thought they were prohibited due to policy and that as a consumer I was only suppose to consider the claims paying ability of the company when speaking with them.

She referred me to the NC Life and Health insurance commissioner. I got their voice mail and left a message. Fat chance the executive insurance commissioner will call me back. I'll let you know if they actually do and the answer to my question.
Well, that’s most unhelpful!

And I doubt that the insurance commissioner will be much help. I expect that they’ll just kick you back to the guaranty fund.

I’m pretty much out of suggestions for you to get better assurance in your situation, beyond limiting your purchases to higher rated companies with lower risks of default, and keeping your maturities relatively short.

My belief in how my guaranty fund is rooted in how I’ve seen guaranty funds operate during my working years, my reading of the statute, and my contact with my state guaranty fund. I expect that your state guaranty fund would work the same way. But I can’t give you any assurance of exactly how the NC guaranty fund would work if you had two or more insurance company insolvencies.

Sorry :D to have hit a dead end for you.

Stinky,

Good news, The NC executive director of life & health insurance called back and answered my questions. Yes, the limits are per company in NC. So you could have four different policies with four different companies for $250k a piece and be covered. He also explained in detail the method that specifies the average interest rate they would use to reimburse within limits of a policy if it were to go into receivership. There were more details than I could remember while cooking breakfast. I do appreciate the call back and the answers I sought. I was impressed. I don't usually get that good a response to an inquiry from someone who is in the know.
My faith in humanity (and in the bureaucracy) is affirmed. :D

I’m happy for you.

That call confirms my general understanding of guaranty fund coverage.

Thanks for following up on your previous post. I appreciate it.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
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