Insurance companies are snapping up asset-backed bonds to fund future payouts on their annuity products which are seeing record demand — a trend that is expected to continue, according to Morgan Stanley.
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Insurers clamor for securitized debt as annuity sales surge
“Despite the potential for interest rates to come down, we think life insurers’ meaningful demand for securitized products can be sustained,” the Morgan Stanley strategists wrote. “Interest rates coming down might dampen attractiveness for fixed rate annuities to some degree. At the same time, though, it could prompt a bump in sales, as potential annuities purchasers may look to lock in an attractive rate.”
