Real World Index Annuity Returns

• We offer the first empirical exploration of fixed indexed annuity returns based upon actual contracts that were sold and actual interest that was credited.• Annuity returns have been competitive with alternative portfolios of stocks and bonds.• Their design has limited the downside returns associated with declining markets.• They have achieved respectable returns in more robust equity markets.• Studies that have criticized FIAs are typically based on hypothesized crediting rate formulae, constant participation rates and caps, and unrealistic simulations of stock market and interest rate behavior. When actual policy data are used, the conclusions change.• Our study is exploratory, because although it is based on actual contracts and actual crediting rates, our policy data set is neither randomly selected nor comprehensive, based upon data provided by 15 FIA carriers