Registered index-linked annuities: How they work, market growth, trends and outlook

Episode 2: Registered index-linked annuities: How they work, market growth, trends and outlook

RICK HAYES: Sure, yeah. Thanks for having us today, Mark. So I'm Rick Hayes, I'm a director with WTW. And I've been with the firm for 20 years now, hard to believe, and I lead the annuity initiative. My background is in financial modeling and reporting, and I typically assist clients with model builds and reviews, pricing and actuarial support, and I participate in M&A activity. And to your question in terms of what I would do with a nice, steady income stream from an annuity payout, I think I'd be obliged to have to donate some of it, but the rest I'd probably like to spend on traveling and eating. Different cuisines and different geographies intrigue me.

MARK MENNEMEYER: Great. Thanks, Rick. Craig, do you want to go next?

CRAIG MICHAUD: Sure. So appreciate being here, and looking forward to this discussion as well. Craig Michaud, I've been with WTW about five years now, although I've been in the insurance industry for a little over 15 now, I believe. I've spent a lot of my time on numerous different types of projects, get involved in a lot of pricing work, M&A work, very annuity-focused as well. But I'm more interested to jump to your question, that's a fun one. If I were to be given a free annuity, the first thing I would do is smile and say, thank you, that's very nice. And what I would do with it is-- if I had the freedom of guaranteed certain lifetime income, I'd sit back and probably focus on something I've always dreamed and wanted to spend a lot more of my time doing. I would write. I would become a writer. I would try it. So that's what I would go to. It would be wonderful to have lifetime certain income.

MARK MENNEMEYER: Great. Thanks, Craig. If we have a follow up on this podcast where we're producing an article, you'll be the first one I go to. All right, Amber, you next.

AMBER RUIZ: OK. Thanks, Mark. Also happy to be here today. I am Amber Ruiz, I am a director with WTW in our Hartford, Connecticut office. Been with the company for about eight years now. And my background is mostly annuities, but I help with a variety of different project types. So everything from embedded value, to M&A work, to pricing reviews and assumption reviews. And then I also do a significant amount of work on our various surveys. So our general pricing survey, some of our product-specific surveys, and our predictive analytics survey. So kind of a range of things. As far as your question on what I would do with an annuity, so my answer is going to be less exciting than the others. But I guess I'm a very practical saver by nature. I have two little toddlers that are going to have to go to college one day, so I'd probably mostly just save the money, put it aside so that they're set for once they need to go to school.

MARK MENNEMEYER: Great. Thanks, Amber. All right. Let's get right into the topic. Let's start with some definitions. And, Craig, maybe I'll turn this one to you first. Could you tell us, what is a RILA? What are the similarities and differences compared to some other types of annuities?

CRAIG MICHAUD: I'll be happy to start there. It's probably a really good place to start with, what is a RILA? So the registered index-linked annuity, which goes by numerous other names with other folks, such as a structured annuity, or an index variable annuity, it's a deferred annuity. And it's a hybrid between a variable annuity, and a fixed indexed annuity. The RILA product, it shares many similarities with a fixed indexed annuity in that the policyholder has only an indirect investment or exposure to equity investments, instead of a direct investment the way they would in a VA. In a variable annuity, the policyholder has their money invested directly into some type of investment fund, whether it's an equity, or even a bond fund, but the policyholder owns those assets, and they're directly unitized assets. In an FIA or a RILA for both of those products where they're the same, the insurance company is not actually investing in any equities for them, they're only invested in a fixed income portfolio, typically, and they give the policyholder some rules, some rights to an exposure to equity markets in some way or another. And the key difference for the policyholder between the FIA and RILA is that the exposure they give to them for an FIA is floored at zero, but for a RILA, it's not floored at zero. There can be losses. You have exposure to the downside. And so that main difference between the RILA and FIA is that the account value growth with a RILA being possible going down, the product needs to be registered. So

it needs to be a registered product just like it does with the VA. So this RILA product really falls right between these VAs and FIAs.

When it comes to the downside, there's numerous variations in how the policyholders account value might be exposed to a loss. Most common structures are some partial equity downside risks are the buffers or a floor, where in a case of a buffer, they don't lose money until you've gotten through the buffer, then they start losing. Whatever the equity market that they are linked to starts losing. Whereas in a floor, they start losing money if the index goes down, but only up to some floor. In addition, the industry, true to form for the insurance industry in general, as a product has been growing. There's been a lot of variations, and flavors, and unique ones starting to come out. Things like a two-sided one, where they can gain money whether the market goes up or down up to a limit. But if it goes down beyond that limit, they lose money. So there's lots of different flavors.

And since the account value of this RILA can lose money like we had talked about, it's registered, another component of where that becomes very interesting of how they're the same and different, how they compare to the FIA and VA is that the RILA, just like in the case of the VA, falls under a reserving regime that is principles-based, VM-21, whereas the FIA falls in under more of the formulaic one with the greatest present value under AG33.

One other very interesting wrinkle for the RILA that, while it's like an FIA that you have some index term where how much your account value is going to grow depends on what an index does some one year or two years later depending on the term of your index, in the FIA sense, it's binary or all or nothing. If a policyholder decrements before the end of the index term, they get no value for how well or how much the index might have gone up during the partial amount of the index term.

The industry has recently passed regulation that RILAs are required to give some amount of value for representing how much the index has gone up if they leave, either with partial withdrawals, full withdrawals, full surrender along the way. It's often referred to in the industry as an interim value. So the interim value regulation is very new for this RILA, but it's one where it's not quite an FIA or a VA. That's maybe a little bit of an overview of how those products compare.

MARK MENNEMEYER: Yeah. Thanks, Craig. Clearly a lot of complexity in the product, but also sounds like it's filling a nice gap between VA and FIA, so thanks for sharing that. Rick, I want to turn it to you now. Could you talk a bit about the market? How large is it? What sort of growth trends have you observed? Anything you can share about that.

RICK HAYES: Yeah. Well, the RILA market's definitely growing, but it's still relatively immature compared to other deferred annuities like FIAs, and VAs, and MYGAs. So as of Q3 2023, RILA quarterly sales were over $11 billion, which is the largest single quarter sales amount yet. And growth occurred at a pretty fast pace beginning in 2018, where quarterly sales were only $3 billion roughly, until 2021 when they finally cracked the $10 billion mark for the first time.

So the big growth was due to some large players entering the market in 2018 and 2021. So some entered with a focus on either phasing out their VAs, or others just complementing their existing annuity portfolio. But growth has slowed more recently, partly due to the lack of new market entrants making a big splash, but also due to rates having risen. The low interest rate market growth having waned somewhat, organic growth continues for many, but there's still more entrants to come which we expect will bump it up just a little bit more.

So to give another perspective as to how RILAs have grown versus other annuities, quarterly VA sales outstripped RILA's by $12 to $13 billion in 2021. But as of this latest quarter, the differential is

below a billion. So this really demonstrates the rebound-- the regime switch, I should say, that has occurred between VAs and RILAs. So both in terms of how policyholders are responding to the value proposition, and how direct riders are reconsidering exposure to the variable space.

Conversely, the differential in quarterly FIA and RILA sales was roughly $6 to $7 billion in 2021, where RILAs had been closing the gap. But as of the latest quarter, that differential has nearly doubled. So this demonstrates the rebounds that FIAs have had due to the higher interest rates, and therefore higher caps and participation rates with the zero floor.

MYGAs are another component to the annuity space, and they have had soaring sales figures lately. This is mostly due to high interest rate environments since mid-2022. So MYGA sales have plateaued somewhat recently, but they're far and away the hottest deferred annuity sales space. MYGA to RILA quarterly sales were almost the same within a billion, I guess, in 2021, but now they're $20 billion off. MYGAs have just skyrocketed.

So all this to say that the RILA market growth is looking steady and healthy, but the mix of deferred annuity sales is an ever-changing landscape due to the interest rate environment and policyholder risk profiles. So some are taking a second look at full downside exposure to the equity market in the variable space, and insurers are rethinking whether they want to manage that risk, and the interest rate environment which drives the crediting rate potential for the fixed and indexed annuities. And then one last point on that is that not all RILA riders are in the GLWB space now, so guaranteed living withdrawal benefits, but many have plans to explore it. And that could be an additional shot in the arm to the overall sales picture, and carve out some of the FIA or MYGA sales differential growth I just mentioned.

MARK MENNEMEYER: Thanks, Rick. You touched on the impact of interest rates a few times there, but could you dive into that a little bit more and talk about the recent impact to the RILA product?

RICK HAYES: Yeah, yeah. Higher rates have definitely moved the needle in terms of market sales, as I just mentioned, but also in terms of risk management and policyholder behavior considerations. So as Craig alluded to in the RILA product description, general account yields play a key role in how policyholders get credited on the index performance. So with low rates, a pure FIA which has a 0% floor, crediting strategy may only provide for 2% to 3% cap rates. So this would mean policyholders get no more than that for a positively performing index, but are guaranteed no loss.

So when RILAs came into the picture, the value proposition was changed to simply state that you can get significantly higher caps in the same low-rate environment, say 20% or more. But you'll have to share in the downside risk to some extent, but not fully. So now that rates have risen, the upside in a RILA still outperforms that of an FIA, but by a margin so large that it might not be achievable. And so the FIA 0% floor might be more attractive for some.

The additional complexity of a RILA in terms of interest rate movement is the interim value component that Craig mentioned earlier as well. So that is the value to the policyholder upon full surrender within the crediting term. So the interim value is intended to reflect the market value of the derivatives at the point in time of the surrender. So due to negative index credit potential, companies will likely hedge the index credit with a short position, as an example, a 10% buffer product can be hedged by selling a 10% out-of-the-money put. And if that put becomes in-the-money, the index loses more than 10%, the company will support the derivative payoff by selling general account assets.

But what if interest rates rise in this scenario and the market value of the fixed income assets results in capital losses? How do companies assess this risk and manage to it? That's a key ALM

consideration in a rising rate environment. An additional complexity related to the interim value relates to the underlying fixed income assets backing the reserves. So the interim value regulation allows but doesn't require a company to incorporate a more traditional MVA adjustment to the value received, which is intended to reflect the change in the fixed income assets market value.

And then one other complexity with rising rates is that policyholder behavior is less predictable. So I say that due to the fact that RILA [INAUDIBLE] data is limited to begin with given the short period of time they've been in existence, but also because there's never been an environment where rates have risen and stayed at this level ever. So all of the dynamic policyholder behavior algorithms are being put to the test, and this is something which many companies are monitoring closely, not just in the RILA's space, I might add, but in general. So even if there is a large FIA or VA blocked leverage to try to blend experience data, the rate reaction to the rate environment we're in just isn't in any data set.

CRAIG MICHAUD: And, Rick, one just comment I would add to everything-- the full landscape of what you're talking about. When we think about what drives the landscape of where the sales are flowing to from one product or another, and you talked about the quarter where the FIAs are starting to see a little bit of a revival, there's a good chance that it's more than just the interest rates that influence what's going on.

It could be something along the lines of the industry starts having a concern, people in society start having a concern that they fear equity markets are at risk. That it's likely that we're in a bubble, or the equity markets are going to drop soon, or they've recently just dropped. So the last time we saw a major market dislocation and markets dropped a lot, sales flowed to FIAs. After the market drops, people like to go buy FIAs for the protection. So that might have been some of what was driving that particular quarter. In general, though, the landscape is always changing, and even what's driving it is not always 100% clear.

MARK MENNEMEYER: Let's talk a little bit now about more of the industry perspective. Amber, in your introduction, you talked about some of the surveys that WTW performs. Can you start by just giving an overview of the recent WTW RILA pricing survey?

AMBER RUIZ: Sure. So WTW did recently perform an industry survey which relates to RILA pricing assumptions among some of the leading RILA riders in the industry. And now, historically, we've conducted quite a few surveys related to a variety of different annuity products. But we thought this one was particularly important to do now just because of the increased emergence of RILAs, and everything that Craig talked about there in the intro about how these are really growing within the marketplace.

So this particular survey questionnaire was focused on mid-2022 practices and methodologies. It covered a variety of topics, including product features, and then also key product pricing assumptions. That was a range of things. So it included assumptions, such as full surrenders, including any dynamic behavior, partial withdrawals, investments, some details about scenarios and options, and then also crediting methodologies and cap setting.

We were very pleased that we had very strong industry participation in this. So of those that participated, it covered around 75% of the RILA riders in the marketplace, and so that was, essentially, 12 of 16 significant players out there. We did spend some time reviewing these results with participants, and also going through things like challenges and opportunities with each participant

to see what common themes emerged here, what are some key takeaways from the results that we got.

MARK MENNEMEYER: Great. And what are some of the major findings that you can share with us?

AMBER RUIZ: Yeah. So I guess to start, I'll mention that most of the participants-- actually, all but one of them don't actually offer a guaranteed living withdrawal benefit. So because of that, we did focus more on the base product elements of the survey. So based on that, there were some interesting takeaways, but that's just, I think, worth mentioning upfront.

To start with, if we look at the base surrenders, I think we saw some interesting patterns there. We saw variation here between respondent assumptions, similar to what we'd see for a product like a fixed indexed annuity, but we saw some differences based on where a policy was at within its life. On average, rates during the surrender charge period were typically lower than what we would see from FIA equivalent products. Whereas if we look at the shock and ultimate period, they were actually higher. So a little bit different between the two periods there, which was an interesting pattern to see. Given the relative immaturity of the market, most companies have not actually revisited their assumptions yet since product launch. So that's important to note as this is something that could change over time as companies revisit and revise those assumptions. Considering that most products, as I mentioned, don't have any rider, that makes these surrender assumptions just even more important.

And by that I mean that a RILA will typically behave similar to a vanilla deferred annuity, where the amount of policies that are remaining to earn the pricing spread is really the major source of earnings on the product. So definitely a very critical assumption, which is why understanding some of these patterns and trends we're seeing is pretty critical.

Another finding to talk about is related to the model structure and the scenario usage. There was a roughly equivalent split between companies that are using a deterministic or stochastic real-world scenarios as part of their baseline pricing. This somewhat surprised us just given the downside element to the crediting strategy.

And then further, only four of the 12 participants indicated that they're using a full asset liability model. That was somewhat interesting as well because there's an additional nuance to RILAs, where equity and interest rate movement can affect the capital gains and losses on the general account assets that support the short downside position. So it did surprise us a bit to see so many deciding to take a liability-only approach in their modeling.

Since we've done the survey and based on conversations we've had, we have learned that some participants have now transitioned from their liability-only approach to more of a full ALM approach, which we view as a positive change overall. So it's possible that this trend to not adopt a full ALM model may have been the case of wanting to quickly enter the market, perform some substantial analysis on that liability-only model, and then plan to develop further full modeling capabilities down the line. So it could be just more of a timing thing, and then once they have the capability, they jump out and do that when they could.

Another finding was that only half of the respondents reflected dynamic policyholder behavior. For those that did model the dynamics, we saw a pretty wide range of dynamic adjustments being used. We expected the variance in assumptions due to overall lack of experience data because, as I mentioned, this is still a pretty new product. But not reflecting dynamics at all was a surprising aspect. We assume, again, this methodology is being revisited as experience data presents itself, and

especially if the interest rate continues to rise, as we've talked about here, there will probably be additional focus on that dynamic calibration.

One last finding worth mentioning is that there were very few of the respondents that considered the integration of a RILA product with their existing VA in force. Most of the respondents were not incorporating this value into their pricing, and that's, again, something that we think is going to evolve over time. More companies might find a way to reflect that in order to enhance their competitiveness and integrate that into their full portfolio. There's certainly more, but those are some of the key takeaways that really stood out to us as we looked at the results.

MARK MENNEMEYER: Great. Thanks, Amber. That's really interesting. Craig, I want to ask you a question. You're really good at drawing option payoffs in the air with your hands and your arms, and I'm sorry that you won't be able to do that with this question. But nonetheless, could you tell us a little bit about hedging strategies that companies use?

CRAIG MICHAUD: I'll do my best to paint a picture with words. But happy to talk about hedging. And when we think about RILA, if we're going to try to review or discuss the hedging strategies for this RILA product, I think it will be useful to consider this on two basic levels, or two levels. One of them is just the fundamental hedge that is intended to cover what the account value growth is.

And then the second one will be maybe a potential secondary hedge that will be put in place to consider reserve capital impacts of the RILAs. Which will often, not just be the capital reserve impact on the RILA, but looked at in a larger holistic perspective as how it interacts in aggregate with other PBR products and reserve products, such as VAs, the VA and RILA interaction, or other VA PBR products with VM-20.

So the base hedging, the more fundamental where this is very, very similar to FIAs, it's going to be performed in a very similar fashion, very often, most companies are approaching their RILA hedging for account value hedging crediting as a static replicating hedge. Where the company buys some amount of derivatives that will pay out exactly what the policy's account value increase or decrease, now in the case of RILAs, will be. It's basically a buy-and-hold strategy.

Now, as a little side comment, there are some companies that will consider their RILA account value hedging similarly to a few less common approaches for FIA account value hedging as a three-Greek hedging program, where they do your delta, vega, rho matching. And the reason that some of these companies just consider these for their account value hedging is that it tends to have a lower average cost, but it's not as certain that it will be exactly what the cost is as what the static replicating hedges are.

So these programs, when you have a static replicating hedge, it's a buy-and-hold, they're typically extremely efficient. It's not like your VA rider hedging that you worry about the efficiency and major basis risks, you typically have extremely excellent hovering right around 100%. They'll usually be in some sort of window of 98% to 102% where they'll actually perform better.

The biggest driver of any deviation in the FIA space is, how much of a hedge do you buy? Do you buy a notional amount of derivatives that will grow at the same rate as what you've promised to pay the policyholder? Do you buy those derivatives at an amount that is equal to their starting account value, or how much that you think will be at the end because someone will decrement throughout the year? So that's the largest driver of these basis risks. And companies usually have a pretty good sense of what the total decrements will be, and that's what keeps it in that 98% to 102%.

Due to the new interim value regulation on RILAs that we were talking about earlier, that starts making this basis risk go away, if you will, and it starts answering the question that how much notional you should buy is the beginning account value. And for those that decrement around along the way that are going to get the interim value, you sell the derivatives that you own for them and give them the payout that they've earned or lost if it was a decrease with the RILA along the way. So it makes the managing of how much notional to buy a little easier on the RILA. That in general is that first fundamental hedging that's going to exist.

One of the things that's interesting about that fundamental hedging is, with the FIA being floored at zero, the various strategies, let's pick an example one, a point to point with cap. You're going to buy a call at the money, and you're going to sell one at the cap, and it's going to pay out exactly what the account value for those rules are. So you've bought a call and sold a call out of the money. The price differential between those two calls is your option budget, and that is taken from your fixed income earned rate.

The interesting thing about the RILA is you're getting extra value to buy the upside from selling the downside that the policyholder has said they're willing to take on because it's going to come from them eventually. So if you sell a 10% out-of-the-money put, for instance, for a RILA floor, the proceeds you get from selling that derivative lets you buy a bigger upside one.

I want to tie that to what you and Rick were discussing with respect to what are the impacts of higher interest rates. Selling a 10% out-of-the-money put when the risk-free rate has gone up demonstrably, you're not going to get as much money. It's going to have to be discounted at the risk-free rate. So it's discounted at 5% instead of 1%, you're losing a little bit of the proceeds. It's another reason why the differential between what an FIA is giving you and what a RILA is giving you starts collapsing a little bit in reality. A little side note on that one as another driver that's almost like the hedging methodology-related.

Now, in addition to this whole fundamental just hedging the account value, they have a lot of other companies that look at, how does the RILA product integrate with our risk from our other products, especially a VA inforce block? Exactly what Amber was referring to at the end of the commentary she was just sharing. That when you have these VA blocks that have these riders-- and a fundamental principle, if equity markets go down, then the amount of extra reserve or general account reserve that you're going to-- an insurance company needs to put up for those VAs is going to increase because the likelihood of the payout for those riders has gone up.

At the same time, in a RILA, if equity markets have gone down, the reserve that the company is going to have to cover goes down. Because you're taking value, they've agreed to share some of the downside. That's an offsetting risk that perhaps instead of buying the derivatives that are a static replicating hedge, you can integrate the two products. And many companies look at that, and a few of them even start subsidizing the pricing and richness of their RILA from that savings. Because you're not buying as much hedge, you're not paying as much transaction costs, you're not earning as much risk-free rate assets.

I could really spend probably an entire podcast discussing some of the methods of how to integrate VAs and RILAs, but there are really two fundamental hedging structures or components to hedging RILAs. The basic account value itself, which is just static replicating often, and then, how does it integrate, and how do you manage the risk as you consider it holistically on a capital reserve management, and managing your blocks together. And that, I would say, there's a lot of variation in how it's done, but there's value there to be had.

MARK MENNEMEYER: Great. Thank you, Craig, for walking us through that. A lot of good stuff there. OK, Rick, I'm going to ask you to predict the future for us. What is the outlook like for RILA?

RICK HAYES: So I think, in general, the outlook is positive. Some of the key reasons I say that might be that until VM-22 PBR is adopted, the fact that they fall under VM-21 or C3 Phase II makes them more attractive in terms of initial strain versus a comparable FIA. Also, for companies with existing VA blocks, as Craig and Amber were saying, if RILA blocks grow enough, there could be meaningful offset to the overall VM-21 and C3 Phase II amounts due to aggregation benefits with a large preexisting VA block. So there are a couple of different components there. We'd expect to see competition increase, of course, as more players enter the market. We know there are more to come, so that's exciting. And this will likely lead to increased WB offerings as well, I think. There are some in the WB space now, but we know that more are going to explore it. There will be new market entrants, so that will drive up the competition in that subset of the RILA world. Hopefully not a repeat of what we saw in terms of VA rider arms races of years past, though, but still, I think, some healthy competition to come. Then in terms of index crediting strategies, I think they'll evolve. So we're already seeing new designs, such as the dual direction strategy that Craig mentioned, where policyholders get the absolute index return subject to a floor and cap. The upside potential is lower under this new design when markets perform positively, but it does offer the counterintuitive positive credit and down equity markets, which is attractive to policyholders, obviously. So design alterations like this could be a differentiating factor in reducing sales disconnects between FIAs as well. But time will tell. So we expect the space to evolve in terms of pricing and modeling sophistication, too. So to Amber's point, we hope that the industry moves in that way. And as industry experience evolves, assumption revisions will be key as well in high-interest rate environments. So we expect a continuation of creative ways to split relationships between equity performance and policyholder payoffs, the evolution of GLWBs. It's an exciting time to be in the RILA space.

MARK MENNEMEYER: Thanks, Rick. If there's an insurance company out there listening to this and agreeing with you and thinking, yeah, this is an exciting time. I want to enter the RILA space as well. Craig, how should they do that?

CRAIG MICHAUD: If they found themselves in that condition, they listen and they say, this is an exciting time, et cetera, I think I'd probably suggest that you start at the way that we commonly start, that I know Amber, Rick, and I have always helped or considered starting with things of this nature. When you're looking into entering a brand new product market space, do some good research. Do your homework. And when it comes to a RILA, there's a lot of common things, and then maybe there's a few items that other products don't typically have. But some key aspects that might be really important to focus upon would be, make sure you understand what the filing requirements are beyond the NAIC state insurance filings, and meeting the compact, and what the compact is for a RILA. But besides something like that is you're going to need to get SEC approval. And currently, the SEC has disallowed or turned off any nonstandard filing applications. They've got that methodology on hold. So it's really a US GAAP filing company that's going to probably be best served for brand new entering it right now. But I would watch that space to see if the SEC changes their mind about the nonstandard format for applying-- being turned on or off, being turned back on.

But other basic considerations to do is really think carefully about what your asset investment approach is going to be. I mean, that's true when you are thinking of entering a deferred annuity space to begin with, such as a MYGA or an FIA, but the primary source of value that everything is derived from is how your assets perform just for this product as it is, for the FIAs and deferred annuities.

But there are nuanced risks associated with the RILA, so I would make sure that you are prepared if you're going to enter the market space. That you're going to be prepared to understand what those nuances are, and what risks you might face. So have your asset side prepared to have those discussions.

And your pricing and modeling approach. Amber and Rick have both been making, I think, some really good points about how the model itself, it's important to-- and in my opinion, whenever we look at pricing or entering a new product, new market spaces, it's important to understand, how are we going to achieve our profit, and what risk are we going to potentially be exposed to that's going to have us deviate from our expected profit?

Make sure that your model is going to be up to task to represent that. And that's where a full ALM model is probably going to serve you better. Things within your model that's going to capture what's going on between the assets that you own, and when you're going to have to sell them, make sure you are truly reflecting that.

Rick made a great point about there are certain scenarios whereby, when the downside is supposed to be covered by the client's policy account value going down. That's nice, but the investment banker you traded that derivative with still needs to be paid in cash, and that cash is going to come from the reserves backing that policyholder's policy which might be an asset that's lost money if rates have gone up. So make sure your model is prepared to do everything.

And then talk in advance. If you're looking at entering a space, have a plan in advance, a strategy in advance. What's the product management and risk management decisions that are going to be there? What's your monitoring system going to be? Develop your key metrics. Do your work up front, and you're going to be well served, and you're going to be able to enter a market, know how to sell it, sell it well, and achieve what your targets are.

MARK MENNEMEYER: All right. Well, thanks for that. We have covered a lot of ground. Clearly more we could talk about. But I think this was a great overview. So Rick, Craig, Amber, thanks again for joining the (Re)thinking Insurance podcast and sharing your annuity insights.

RICK HAYES: Thanks, Mark.

CRAIG MICHAUD: I've enjoyed it. It was fun to discuss it with all of us.

AMBER RUIZ: Thank you, Mark, and thank you, everyone, for tuning in.

MARK MENNEMEYER: See you next time on the (Re)thinking Insurance podcast.

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