ANNUITY RATES CONTINUE TO SLIDE

I wish that headline was an April Fools’ joke but it’s not. In February and March, we saw a slow but steady erosion of rates and who knows if we’ve bottomed out. This may not affect a scheduled plan termination but it certainly may damper the enthusiasm for retiree carve-outs.

Speaking of PRT carve-outs the IRS ruling allowing lump sums to retirees in a non-termination is already receiving push-back from the U.S. Senate. Let’s see how this plays out.

For those of you going to the EA meeting please drop by our booth for some free trinkets and a chance to win an Amazon gift certificate.

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.

The Fed Makes a Statement

Fed Chief Jerome Powell two days ago made the following statements:

"Financial markets became more volatile toward year-end, and financial conditions are now less supportive of growth than they were earlier last year."

"We will carefully monitor these issues as they evolve,"

Plan sponsors who are thinking rates will continue upward may need to re-think that. The good news is if rates stay low the equity markets should continue their rally so plan sponsors will probably still be in a position for a favorable settlement cost for a pension risk transfer or plan termination.

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.

ANNUITY RATES REMAIN FLAT

We want to welcome the many newcomers to our newsletter. We know you all are busy with many things to read so we keep it short and to the point. You can always reach out to us for additional information. Updated rates in the middle of the month can be found on our website atwww.brentwoodllc.com

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.

WELCOME TO A NEW YEAR

We hope all had a great holiday season and wish everyone a happy new year. At year-end we saw a slight fade in annuity rates of about 10 BP across the board. That’s not much considering all the “Bear” talk of an inverted yield curve and a stock market decline primarily based on the trade war. So yes, this could be a very turbulent year if those two predictions come true.

But it’s January 3, “why so serious?”

Sorry, I couldn’t resist.

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

This is our last newsletter of the year but we’ll update the rates in the middle of the month on our website, www.brentwoodllc.com.

What a year, what else is there to say except we wish you all a safe and wonderful holiday season.

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.

They're Rising

Slowly but surely annuity rates are rising. The Fed, the rapidly increasing budget deficit as a result of the tax cut and other factors are all adding up to slow but sure rising rates. Yet market timers should remember they lose about 75% of the time so our advice on when to purchase a group annuity contract will always remain when the settlement cost is in your favor. In the immortal words of the great sportswriter and novelist Dan Jenkins, “There ain’t nothing in this world that’s dead solid perfect.”

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.

Feds Rates Raised As Expected

It looks like the Fed is doing exactly what all of us expected with gradual rate increases throughout the year with potentially one more to come this year. All the economic indicators point in that direction and we can probably expect more of the same next year.

A note about our rates as a reminder to those who have been with us for years and our newcomers. These are reflective of the rates we would see on a final bid date, meaning the date a plan sponsor would agree to purchase a GAC by 4 PM Eastern. As most of you know, insurers never really get serious about their pricing until they know a plan sponsor is ready to buy.

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.

ARE INTEREST RATES WAITING ON SOMETHING?

I look at this table and think how consistent these rates have been since May. Are they waiting
for something to shock them into orbit, or bring them back down to earth? Or could it be a very
major event happening in November that may be the catalyst?

Then again, I did get my undergraduate degree in political science so perhaps it’s just me
thinking out loud.

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

AS EXPECTED, FED HOLDS RATES

The Fed seems committed to a gradual increase in rates and most experts still expect two more
rate hikes before year-end. Most economists agree this is best for an economy exhibiting strong
growth.


And as we can see from the table below annuity rates have followed suit with a gradual increase
over the year.


 

ANNUITY RATES REMAIN STEADY

In our last newsletter we wondered if the rise in interest rates was a trend or just a temporary surge. It’s five weeks and counting now and we’re still at the May 1 levels. So as usual, we’ll see.

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

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.

ANNUITY RATES ARE MAKING A MOVE

As can be seen below the rate increase we all expected is slowly but surely happening. There are
many contributing factors and as always the hard part is wondering if this is a trend or just a
temporary spike. We haven’t seen rates this high since December of 2016.

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.