‘What the heck is this thing?’ Panel recalls how RILAs gave industry a jolt

NASHVILLE – Registered indexed-linked annuities are no longer just a stopgap product in response to unique economic conditions. RILA sales are growing every quarter and nearly every major insurer has a version.

A Corebridge Financial RILA is the next expected entrant in what is becoming a very crowded product field.

Scott Stolz, managing director at iCapital Solutions, moderated a session at the 2024 LIMRA Annual Conference titled, "Unlocking Potential: Registered Index-Linked Annuities Revolutionizing Product Design."

RILA sales are expected to hit $60 billion in 2024, said Keith Golembiewski, assistant vice president, director of LIMRA Annuity Research, a 25% increase over 2023.

A RILA is a long-term, tax-deferred insurance contract that's designed to help people save for retirement. RILAs work by tying the performance of the contract to one or more stock market indexes, and offering a level of protection from market downturns.

"A lot of great things happening, and this is where RILA is growing," Golembiewski said. "I think it's going to continue to grow, even if we do see some rate cuts."

The Federal Reserve is expected to cut interest rates when it meets Wednesday, a long-anticipated move that changes the value proposition for many annuities.

Panelists from Jackson National, MassMutual and Brighthouse Financial explained what their respective RILA products do for their companies. The first RILA product was introduced in 2010 by Equitable.

'What the heck is this thing?'

Cassie Onorato, head of MML Investors Services Retail Annuities at MassMutual, recalled first encountering a RILA in 2013.

"At first, we were like, 'What the heck is this thing?'" she said. "It was tough because we had life insurance folks in charge of the annuity sales distribution group. So it took us a little bit to find our footing, To figure out how to sell it and how to position it."

But the product came along at the right time, Onorato said, when some annuity riders had fallen out of favor and become an expensive proposition.

"You could really go to a conservative client and say, 'Listen, we can protect you, or the product can protect you, [with a] 25, 30% buffer, and you still have upside potential,'" she added. "I mean, who doesn't want to buy something that gives you upside potential and downside protection and no explicit fees?"

Leslie Williamson, head of digital distribution at Brighthouse, agreed that giving clients peace of mind during stock market fluctuations, inflation concerns and recession threats, is helping RILAs remain a powerful product.

"I think having that confidence, weathering the storm, when it does get volatile or choppy, knowing you have some downside protection, has really helped clients stay invested and take some of that emotion out of their investment decisions," she said.

VAs took a hit

However, the rise of RILAs came at the expense of traditional variable annuities. For years, Jackson National led the industry in traditional VA sales. The insurer finally pivoted to RILAs in the fall 2021 with the launch of Jackson Market Link Pro and Jackson Market Link Pro Advisory.

"I think internally, we would have liked to move faster," said Matthew Lemieux, senior vice president for product management and investment product strategy for Jackson National. "But I think as we came into the market at that tail end of 2021, at that point the market was growing, so our real goal was getting a product in the marketplace."

Stolz, a longtime veteran of the industry, recalled how he "waged an eight-year campaign" against naming the product a "registered indexed-linked annuity," claiming that it would confuse people. Others still call the products buffered or structured annuities.

By any name, the RILAs appear here to stay.

"The fact that I am now moderating the session on RILAs probably tells you I've lost that battle," Stolz joked.

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