Annuity vs Insurance Company Bond
Take ING for example: They issue bonds of all types of maturities and of different seniority (30 year senior secured all the way down to 1 year jr un-secured). If they go BK, the super senior is obviously the best place to be. Now add an annuity to that, how do the companies liabilities to its clients fit into the BK picture? There is usually 100k or greater in the State fund (depending on the state) to protect against major losses, but beyond that...how are the stakeholders sorted out?
[quote=anonymous]Their policy holders will all get paid before any bondholders.[/quote]
This may not be correct. Only funds held in seperate accounts are not subject to the companies creditors. Any funds not held in those accounts would be junior to bond claims.
See New Jersey Law Journal
VOL. CLXXXVII– NO.3 – INDEX 175 for more clarification.