Top Annuity Companies
Annuities typically contain a death benefit, a key feature of life insurance contracts. Consequently, it is not surprising that annuities are offered by insurance companies. When shopping for annuities, don’t focus only on the annuity product itself – the credited interest rate offered by a fixed annuity, the performance track record of funds within a variable annuity, or the index and interest-calculation formula of an indexed annuity. Instead, look first at the underlying soundness of all annuity companies whose products you consider.
Annuities accumulate income over a lengthy time interval before paying it out to the annuity holder. Investments made by the insurance company generate income to fund the annuity during its accumulation period. The company is responsible for making the periodic payments received by the holder during the distribution period. In order for the holder to receive full value from the annuity, the company must continue to operate over the accumulation period and generate sufficient income to fund the annuity, then stay in business over the remaining life of the annuitant.
This dependence on the soundness of the issuing insurance company applies even in the case of variable annuities, in which the customer selects and manages investment products that are not directly controlled by the insurance company. Nonetheless, the insurance company still administers and funds certain features of the annuity, and any financial difficulties suffered by the insurance company will threaten to tie up annuitants’ funds.
Many insurance companies produce annuity products, but the ones listed below deserve to be considered top annuity companies because they stand the test of financial strength.
John Hancock Financial
John Hancock is one of the most recognizable names in American finance. It is currently owned by the Canada’s Manulife, which ranks as the 4th-largest global life insurer with a market capitalization of over $16 billion. John Hancock is ranked highly by all four of the major insurance-company rating services: A.M. Best (A++; highest ranking), Standard & Poor’s (A+; 2nd-highest ranking), Moody’s (Aa3; 4th-highest ranking) and Fitch (AA; 3rd-highest ranking).
Metropolitan Life Insurance Co.
MetLife is another longtime U.S. stalwart that ranks among the world’s biggest life insurance companies, with the 5th-largest market capitalization of over $14 billion. Its financial-strength ratings are uniformly high: A.M. Best (A+; 2nd-highest), Standard & Poor’s; AA-; 4th-highest), Moody’s (Aa2; 3rd-highest) and Fitch (AA; 3rd-highest).
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ING, the Dutch financial giant, offers banking, investment and retirement services as well as insurance. Its market capitalization of nearly $10 billion places it 9th on the world list of life insurers. Its financial-strength ratings are uniformly high: A.M. Best (A+; 2nd-highest ranking), Standard & Poor’s (AA-; 4th-highest ranking), Moody’s (Aa3; 4th-highest ranking) and Fitch (AA-; 4th-highest ranking).
Jackson National Life Insurance Co.
One of America’s largest life insurers and financial firms, Jackson National is wholly owned by England’s venerable Prudential PLC, the world’s 8th-largest life insurer with market capitalization of $10 billion. Long an industry leader among annuity companies, Jackson National’s financial-strength ratings are solid: A.M. Best (A+; 2nd-highest ranking), Standard & Poor’s (AA; 2nd-highest ranking), Moody’s (A1; 5th-highest ranking) and Fitch (AA-; 4th-highest ranking).
New York Life Insurance Company
New York Life is America’s largest mutual life insurer. It ranks at the top of the heap in terms of financial strength, one of only a few firms to hold the highest ranking from all four major insurance-rating agencies: A.M. Best (A++), Standard & Poor’s (AAA), Moody’s (Aaa) and Fitch (AAA).
The foregoing deserve to be considered top annuity companies. They offer a wide range of annuity products and services. At least as important are their long and successful history and their underlying financial soundness. Most investors are familiar with the truism that the return on your money is not nearly as important as the return of your money. Nowhere does this apply more strongly than to the evaluation of annuity companies.
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