2025 Top 5 Annuity Stories: Lawsuits, layoffs and Brighthouse sale rumors
The year in annuities started well, ended well, and was pretty good in the middle, also. Sales continued to flourish as insurers took advantage of sales-friendly conditions.
Overall annuity sales hit a new quarterly record of $119.3 billion in the third quarter, marking the eighth consecutive quarter of sales over $100 billion. LIMRA projects total sales to surpass $400 billion for the year.
Still, controversy persisted within the annuity world. Lawsuits were filed, charges made, and at least one significant annuity seller lingered on the market for most of the year before being sold.
All of these issues provided grist for our most-read annuity stories of 2025:
Annuities vs. the 4% Rule: Why income wins
Research published in the Journal of Retirement found that full or partial annuitization leads to better retirement income outcomes than the 4% rule. The research also found that those with smaller nest eggs benefit from annuitizing more of their income.
Researchers found that for anyone retiring with $250,000 or more in savings, a strategy of systematic withdrawals from more liquid investments or cash savings combined with annuities outperforms other strategies. This remained true whether the retiree bought an immediate annuity or had a strategy that included a gradual, laddered annuitization process.
The popular 4% rule is problematic, the researchers found. Although the 4% rule offers flexibility, withdrawing 4% of initial wealth, subsequently indexed to inflation each year, has significant failure rates for retirees at older ages.
Those retiring with less than $250,000 benefit most by annuitizing higher portions of their savings, if not all their savings.
Ex-employees sue Verizon over PRT deal
A group of ex-Verizon employees filed this lawsuit challenging the efficacy of insurance companies managing pension funds.
Filed in late December 2024 in the Southern District of New York, the Verizon pensioners claim the pension risk transfer deal agreed to in March 2024 threatens their retirement funds. Verizon inked the $5.9 billion PRT deal for Prudential Financial and Reinsurance Group of America to manage the pensions of 56,000 Verizon retirees and their beneficiaries.
Prudential and RGA agreed to “irrevocably guarantee and assume 50% of the benefit obligation to the retirees, except in certain jurisdictions where Prudential will irrevocably guarantee and assume 100% of the benefit obligation,” a news release said.
The transaction is the second major PRT deal between Prudential and Verizon. In 2012, Prudential completed an approximately $7.5 billion transfer that covered approximately 41,000 of Verizon’s retirees.
Neither Prudential or RGA is named as a defendant in the lawsuit. Instead, plaintiffs are suing Verizon, several Verizon groups connected with the pension plan, and State Street Global Advisors Trust Co. The lawsuit remains active.
F&G Annuities & Life lays off 192
In May, F&G Annuities & Life laid off 192 employees across both its home offices in Des Moines, Iowa, and remote functions.
The news came three weeks after F&G reported first-quarter earnings per share of $0.72, falling well short of analysts’ expectations. The EPS miss came despite a substantial increase in revenue: $2.18 billion against a forecast of $1.37 billion.
The company also reported a record $67.4 billion in assets under management, a 169% increase year-over-year. But the inconsistent results sent investors into sell mode and shares dropped about 12% overnight.
At that point, F&G shares were down nearly 35% in six months. The share price bounced back slightly over the summer before declining again.
Jury: split decision in Cutter annuity sales trial
In April, a Massachusetts jury delivered a split verdict against an advisor accused of making improper annuity sales.
The jury determined that Jeffrey Cutter and Cutter Financial Group did not violate Section 206(1) of the Investment Advisers Act of 1940, but did find violations of Section 206(2).
Section 206(2) bars advisors from engaging “in any transaction, practice or course of business which operates as a fraud or deceit upon any client or prospective client.”
Cutter and his legal team claimed victory in their long-running legal battle with the Securities and Exchange Commission.
“Today, the jury found what we have been saying for more than four years: that we did not intentionally or recklessly defraud any clients,” Cutter said in a news release.
That news release prompted a further request for sanctions from the SEC, which argued that Cutter did not take responsibility. The court case continues.
Brighthouse Financial execs evade sale rumors
Analysts made several attempts to get comments on sales rumors swirling around Brighthouse Financial in a sometimes-testy second-quarter earnings call in August.
“With respect to any market rumors, I don’t have any comments on that,” CEO Eric Steigerwalt said at one point.
The long-running sales drama ended in early November when Brighthouse confirmed that Aquarian Capital will acquire it in a $4.1 billion deal.
Aquarian Capital will acquire Brighthouse for $70 per common share in cash, a long-rumored transaction. Aquarian becomes the latest private equity/investment manager to take over a large-scale annuity seller.
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