The Tech World

Who would have ever thought that by living daily on Facebook our data was in jeopardy? Okay,
just joking as our millennial children would say, but none of us can be happy about the effect
that and other issues are having on Tech stocks. We in the pension world know that interest rates
are just part of the story and a healthy funding ratio also relies on a healthy stock market. So
let’s hope this turbulence passes soon.


We believe that the following rates applied to the mortality scale MP-2017 will give you a pretty
good indication of the price of a group annuity contract. Use the smaller rate for small contracts.

Tariffs Anyone

If I can remember my Economics 101 tariffs lead to higher prices for goods, higher prices for
goods leads to inflation and inflation leads to higher interest rates. Again, I ask; Tariffs, anyone?

We believe that the following rates applied to the mortality scale MP-2017 will give you a pretty
good indication of the price of a group annuity contract. Use the smaller rate for small contracts.

WHAT’S GOING ON DOWN THERE

Sorry, I couldn’t resist, that’s an inside joke for the Brentwood partners. The actual quote for all you older Pittsburgh Steeler fans is from the great Myron Cope but it works right now with all the volatility we’re seeing in the markets.

We believe that the following rates applied to the mortality scale MP-2017 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts.

Happy Holidays

Wow, what a year! This is our last newsletter for 2017 but we will be updating the rates in the middle of the month on our website.

The staff at Brentwood wishes you and your families a safe and happy holiday season.

We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts

Is The Bond Bull Market Coming To An End?

Here’s a link to a very interesting article from Michael Wilson at Bloomberg. If you’re a fan of obscure charting this may be for you.

https://www.bloomberg.com/news/articles/2017-11-06/bond-signal-from-30-year-bullmarket-s-genesis-close-to-reversal

We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts.

AIG Released From Sifi Oversight

With that news only Prudential remains under the “the too big to fail” extended financial oversight. We think this is appropriate especially for PRT. Prudential recently announced International Paper’s $1.3B PRT transaction for retirees with benefits less than 450/mo. We welcome the extra oversight beyond the New Jersey Insurance Commission’s work in light of the huge current trend toward offloading retiree liability.

We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts

World Events Beyond Our Control

At lease in the short-term we think annuity rates will slip mainly because of tension with North Korea and the impending Hurricane Irma. We all know how popular Treasuries become when a major event like a nuclear exchange hangs in the air.

I can’t believe I actually wrote that last sentence.

We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts.

A FED PRESIDENT WANTS TO KEEP RATES ON HOLD

Federal Reserve Bank of St. Louis thinks that because of the "unexpectedly low" price data that we're in a low inflationenvironment and there is no need to raise the interest rates His theory is one we should all monitor to try and get a handle on where the rest of the members are on this issue.

We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for smaller contracts.

ANNUITY RATES MAKING A MOVE

By looking at the table below it appears that annuity rates have been pretty steady. But in the past three weeks rates have increased by almost 25 BP.  As always we question if this is a trend or just a temporary spike? And as always only time will tell and we all know how world events can quickly change everything.
 
We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts.

And Now, Qatar

The turmoil in Qatar will have a short-term effect on annuity rates but we don’t expect a lasting effect. If we can all just revisit Economics 101 for a short time we’ll remember that rising oil prices leads to higher inflation that leads to higher interest rates and vice versa.

There that’s over with, carry on with your day.

We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts.

MORTALITY, MORTALITY, MORTALITY

It’s nice to know we’re all going to live longer, unless you’re trying to terminate a DB plan.  But I’ll take the former.   
 
We’ve tweaked our annuity rate model and tightened the range from 20 BP to 10.  Always keep in mind our rates apply when a plan sponsor is actually purchasing a GAC not for a preliminary bid where an insurer throws out an artificially high price. 
 
We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts. 

We're Late

We’re late with this newsletter because of our attendance at the EA meeting, and thanks to all of you who came by the booth to say.

Oh and by the way, annuity rates are fading like an actor well past their prime.

We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts.

Annuity Rates Level Since the Election

After the election and fed increase in December we're now seeing rates search for level ground. They have been pretty stable for the past month. 

The spending plans for this administration along with increased tariffs historically has led to inflation, and we all know what follows with that.

We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for smaller contracts.

2016 Annuity Rates Recap

Annuity rates are closely tied to the 10 and 20-year Corporate Bond yields and during the course of the year we saw the following highs and lows. We think deferred annuity rates bottomed out around late August and then picked up about 80 BP and peaking when the Fed increased their rate. Immediate annuity rates increased about 100 BP from late September to shortly after the Fed increase. Since they peaked immediate rates are down about 15 BP and deferred rates about 25 BP. Interestingly immediate and TV rates are almost exactly where they were at the beginning of 2016 with rates for actives down about 20 BP.

We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts.

Rates Continue To Rise

It's December and that means we could be seeing the long-awaited and often discussed possible Fed rate increase. Looking at the rates below it appears that the market has already been priced in the expected upturn. 

We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts. 

RATES RISE DRAMATICALLY AFTER THE ELECTION

As of this writing how about 37 BP in the 10-year market and 30 BP in the 20-year market? That should help, if they stay there or obviously go higher.  Reversion to the mean is the ever-present elephant in the room so let’s see what happens especially if the Fed makes a move in December.  

We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts. 

 

Finally

I was a political science major as an undergrad and that’s become a curse with this election since I’ve been avidly watching the coverage. One more week to go and then we’ll let the winner pick up the pieces. In the meantime rates are up. This could signal that the bond market is already pricing in a Fed rate hike in December.

As you can see below we’re now using the new SOA mortality table since we believe the insurers are using something similar.

We believe that the following rates applied to the mortality scale MP-2016 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts.

Is the Fed Teasing Us or Just Crying Wolf

Richard Moody Chief Economist at Regions Financial Corporation brought to our attention that the Fed keeps giving us clues about a rate hike that never happens. We all know how important credibility is in business so I’m wondering how much longer we should even bother trying to interpret their oblique messages?

Of course, that will all change if they just raise rates.

We believe that the following rates applied to the mortality scale MP 2015 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts.

Annuity Rates Remain Flat

As the election moves on now into its final stages we don't expect much rate movement. This is par for the course in a national election year. Since this one is considered a "change election" its  exacerbates the situation.

We believe that the following rates applied to the mortality scale MP 2015 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts. 

17 Million Brits Vote and the World Goes Crazy

Well, Brexit was fun. We'll let the rates below speak for how we feel about that vote.

As a reminder, we update annuity rates in the middle of the month on our website.

We believe that the following rates applied to the mortality scale MP 2015 will give you a pretty good indication of the price of a group annuity contract. Use the smaller rate for small contracts.