Starting MYGA Investment

[RetireeRobert]

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Originally Posted by Dtail Multi Year Guaranteed Annuity.

OK, thanks!

[RetireeRobert]

I myself was considering what to do for higher yields on some of the cash I had sitting inside my IRAs. I chose to go the stock dividend route at the start of last spring when Covid knocked the market for a loop. I was able to nail down several quite juicy yields on strong stable company stocks at that time for the dividends. Including one cumulative convertible preferred stock in a REIT got me into double digits yield. But the market has recovered since then, and the stock dividend yields nowhere near as juicy now. So may need to consider other investments for my other "cash" piles to get something better than 1/2% or 1%.

[pb4uski]

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Originally Posted by Koolau We still have some that were called SPDA (Single Premium Deferred Annuity). I think they are virtually the same thing. The one DW took out a year ago is, I think, the MYGA. I think of them as a higher yielding but more restrictive (AND less guaranteed) Certificate of Deposit. YMMV

Yes, SPDA and MYGAs are the same. Where I worked we always called them SPDAs so the first time I saw MYGA used here I had to look it up.

Essentially the insurance industry's version of CD but with more onerous early withdrawal penalties and no FDIC insurance but sometimes higher crediting rates.

[pb4uski]

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Originally Posted by RetireeRobert I myself was considering what to do for higher yields on some of the cash I had sitting inside my IRAs. I chose to go the stock dividend route at the start of last spring when Covid knocked the market for a loop. I was able to nail down several quite juicy yields on strong stable company stocks at that time for the dividends. Including one cumulative convertible preferred stock in a REIT got me into double digits yield. But the market has recovered since then, and the stock dividend yields nowhere near as juicy now. So may need to consider other investment s for my other "cash" piles to get something better than 1/2% or 1%.

You may want to peruse the threads on non-FDIC savings instruments and the preferred stock thread. I have both the DERI and Toyota IncomeDriver Notes (both are now 1.5%) and a portfolio of 36 different preferreds that collectively yield a little over 5.5%.

Duke Energy has a note program too but they only pay 1%.

https://www.early-retirement.org/for...ms-105827.html

https://www.early-retirement.org/for...-107188-2.html

[Koolau]

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Originally Posted by pb4uski Yes, SPDA and MYGAs are the same. Where I worked we always called them SPDAs so the first time I saw MYGA used here I had to look it up. Essentially the insurance industry's version of CD but with more onerous early withdrawal penalties and no FDIC insurance but sometimes higher crediting rates.

The good news is my SPDAs are paying around 5% which would be good today. Wish I had MORE! YMMV

[RetireeRobert]

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Originally Posted by pb4uski You may want to peruse the threads on non-FDIC savings instruments and the preferred stock thread. I have both the DERI and Toyota IncomeDriver Notes (both are now 1.5%) and a portfolio of 36 different perferreds that collectively yield a little over 5.5%. Duke Energy has a note program too but they only pay 1%. https://www.early-retirement.org/for...ms-105827.html https://www.early-retirement.org/for...-107188-2.html

Thanks for the references. Will check them out.

[catotx]

In case anyone is interested, Canvas Annuity, an affiliate (or subsidiary) of Puritan Life of America, is offering MYGAs with the following rates

3-yr 2.75%
5-yr 3.25%
7-yr 3.5%

https://canvasannuity.com/#/home

Puritan Life is rated B++ by AM Best. I guess they can offer these rates because they don't sell through a third party broker.

[RetireeRobert]

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Originally Posted by catotx In case anyone is interested, Canvas Annuity, an affiliate (or subsidiary) of Puritan Life of America, is offering MYGAs with the following rates 3-yr 2.75% 5-yr 3.25% 7-yr 3.5% https://canvasannuity.com/#/home Puritan Life is rated B++ by AM Best. I guess they can offer these rates because they don't sell through a third party broker.

Thanks, will check them out.

[pb4uski]

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Originally Posted by catotx In case anyone is interested, Canvas Annuity, an affiliate (or subsidiary) of Puritan Life of America, is offering MYGAs with the following rates 3-yr 2.75% 5-yr 3.25% 7-yr 3.5% https://canvasannuity.com/#/home Puritan Life is rated B++ by AM Best. I guess they can offer these rates because they don't sell through a third party broker.

Those are pretty attractive crediting rates, but B++ is pretty low.

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Our key conclusion is that an IFS rating of ‘A–’ from A.M. Best is most comparable with a ‘BBB’ IFS rating from Fitch, as well as Moody’s and Standard & Poor’s (S&P).

So if AMB A- is comparable to BBB from Fitch/Moody's/S&P then AMB B++ then AMB B++ would probably be BBB- or BB+ by Fitch/Moody's/S&P.

[Dtail]

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Originally Posted by pb4uski Those are pretty attractive crediting rates, but B++ is pretty low. So if AMB A- is comparable to BBB from Fitch/Moody's/S&P then AMB B++ then AMB B++ would probably be BBB- or BB+ by Fitch/Moody's/S&P.

And thus perhaps in the junk investment category.

[pb4uski]

Yeah, but for some reason I don't perceive near as much credit risk with a SPDA issued by a S&P BB+ insurer as a bond issued by a S&P BB+ company.

[Dtail]

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Originally Posted by pb4uski Yeah, but for some reason I don't perceive near as much credit risk with a SPDA issued by a S&P BB+ insurer as a bond issued by a S&P BB+ company.

Agree in concept.

[jazz4cash]

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Originally Posted by Dtail And thus perhaps in the junk investment category.

I think these ratings for insurance companies are often confused with bond ratings. I’ve only heard the term junk in reference to bonds rated below BBB- AM Best seems to specialize in insurance company (financial strength) ratings and B++ is shown as “good” on their scale. A company could issue bonds with various ratings depending on the details of each security.

[jazz4cash]

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Originally Posted by pb4uski Yeah, but for some reason I don't perceive near as much credit risk with a SPDA issued by a S&P BB+ insurer as a bond issued by a S&P BB+ company.

Yeah I agree but it’s apples to oranges. The insurance co ratings are for the entire company and there is also the State Guaranty Association protection. The bond rating is just for the particular issue and may not reflect the financial strength of the company overall.

[24601NoMore]

I just spent a couple hours "trying" to research the Canvas MYGA as it looked pretty darn compelling.

I wasn't able to find much of ANYTHING on either Canvas or the Insurance company (Puritan Life) that underwrites the MYGA.

Even checking LinkedIn..Puritan Life had a grand total of *13* employees - including the President/CEO listed. Worse, Canvas had TWO employees on LinkedIn.

Something smells very fishy to me about that one, glitzy websites aside. I get that they have a (apparently fairly low) AM Best rating..but even that..there's no history of the company, "about us" on EITHER website, etc. Very strange and candidly enough to make me pass on what's a pretty compelling product and rate..

[jazz4cash]

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Originally Posted by 24601NoMore I just spent a couple hours "trying" to research the Canvas MYGA as it looked pretty darn compelling. I wasn't able to find much of ANYTHING on either Canvas or the Insurance company (Puritan Life) that underwrites the MYGA. Even checking LinkedIn..Puritan Life had a grand total of *13* employees - including the President/CEO listed. Worse, Canvas had TWO employees on LinkedIn. Something smells very fishy to me about that one, glitzy websites aside. I get that they have a (apparently fairly low) AM Best rating..but even that..there's no history of the company, "about us" on EITHER website, etc. Very strange and candidly enough to make me pass on what's a pretty compelling product and rate..

I'd say you're overthinking this, but if you're not comfortable let it pass. Their rates are not that much better than some other higher rated companies (that I've never heard of). I remember when I considered LinkedIn to be a form of credential but those days are long long gone. Puritan's rating of B++ is listed as "good" everywhere I look but some people would consider "good" to be fairly low, I guess. Since these are insurance companies, I might check with some state insurance agencies to see if they have complaints if I was concerned.

[24601NoMore]

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Originally Posted by jazz4cash I'd say you're overthinking this, but if you're not comfortable let it pass. Their rates are not that much better than some other higher rated companies (that I've never heard of). I remember when I considered LinkedIn to be a form of credential but those days are long long gone. Puritan's rating of B++ is listed as "good" everywhere I look but some people would consider "good" to be fairly low, I guess. Since these are insurance companies, I might check with some state insurance agencies to see if they have complaints if I was concerned.

Just doing basic due diligence, which hopefully everyone would do when considering making a large (in this case, potentially six figure) investment with any company..

It's not just the employees on LinkedIn that are a red flag. There is absolutely zero info on their website about the company, it's officers, directors, financials, history, etc. THAT is very strange for a supposedly reputable company. Pretty much ANY company regardless of industry has that basic info posted on their website.

I do like the product they're offering - and it's not just the rates that make me like it. But as there's literally no info whatsoever about the company available anywhere that I looked (and I did spend quite a bit of time trying to do proper due diligence), you're right - it's not worth the risk of investing six figures (or, IMHO, any amount) with them.

[jazz4cash]

That’s a significant sum but this is a very simple fixed rate product. I wouldn’t think it’s a red flag that the officers are not listed on a web page. I did get a list using google. They are one of a very few insurance annuities that are distributed directly with no broker which presumably lets them offer higher rates. OTOH I did get some level of comfort dealing with a broker like Blueprint Invv CB one before buying the product from A rated Americo. At least the brokers have some choice but the big name well rated companies don’t pay very well.

[Finance Dave]

We bought one of these within our FIDO TIRA recently. I wanted highly rated insurer, so we are only getting 1.7% but that's much better than CD rates of .5%. We just did $100k for now, as I wanted to see how it works. Once we get comfortable, we may open 3-4 more and spread them amongst insurers.

The one downside is all the legal requirements...we had to be "interviewed" by our adviser on the phone, then sign a bunch of documents online via Docusign, then got a huge contract in the mail. Just takes a little time to go through all this.

[catotx]

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Originally Posted by Finance Dave We bought one of these within our FIDO TIRA recently. I wanted highly rated insurer, so we are only getting 1.7% but that's much better than CD rates of .5%. We just did $100k for now, as I wanted to see how it works. Once we get comfortable, we may open 3-4 more and spread them amongst insurers. The one downside is all the legal requirements...we had to be "interviewed" by our adviser on the phone, then sign a bunch of documents online via Docusign, then got a huge contract in the mail. Just takes a little time to go through all this.

Just curious, does Fidelity list the MYGA as one of your holdings in your TIRA? Or was the money simply withdrawn and you don't see it when you logon to Fidelity?