The headlines in the last couple of weeks have brought together two worlds that do not usually collide. The National Basketball Association (NBA) and the world of fixed annuities. This is the culmination of a unique trend in the private equity/private credit space that we have seen over the last 15 years. This brings together the highly competitive and highly lucrative world of professional sports with the rather mundane world of fixed annuities.
To explain how these worlds came together and what it actually means, you must understand how these annuities operate.
How Fixed Annuities Work
Functionally, a client may have an amount of money they want to allocate toward a guaranteed rate of return. The national average annuity premium is approximately $150,000, according to Annuity.org. They approach a broker who uses a screener to try and get them the best rate of return on those dollars. The rates are usually determined by prevailing interest rates at the time. The longer you are willing to lock up those dollars, the higher rate you get. I have experience with these types of insurance products, and they are sought after for their tax-deferred structure for tax-conscious or conservative investors.
What this means is that you are promised a rate of return by an annuity company; in exchange, you write them a check. With your money, the insurance company pays commissions to your broker, invests the premiums through its general account, and hopefully earns a greater rate of return than the rate it credits to you. The difference between those rates is the spread. That spread is achieved by generally mixing different types of investments so that the annuity company always has the liquidity to pay claims while being able to make certain longer-duration investments that provide more returns. Regulators do put limitations on what they can do with those funds, so that your annuity dollars do not act as de facto investment capital for the owner of the annuity company (3% of the total is considered the maximum allowable amount in related/controlled investments).
When this functions correctly, the client, the broker, and the annuity company are all happy. Everyone makes money, and so far, this has been a great deal for everyone involved.
Where the Lakers Come In
However, there may be storm clouds on the horizon. Delaware Life, an annuity and life company that purchased the assets of the old Sun Life book after they exited the US market, is controlled by Mark Walter and Guggenheim Investments. There has been some troubling recent news. It appears that some of the premiums paid into these annuities were ultimately invested in assets connected to Mr. Walter’s other businesses. According to reporting by Reuters, Delaware Life, an insurance company controlled by Mr. Walter, restated its financial statements in 2026 and reclassified a significant portion of its private-credit investments as affiliated investments. That reclassification increased the company’s affiliated investments to approximately 42% of its invested assets at the end of 2025, compared with less than 5% previously reported. While on its face, if those investments perform, then everything should be fine. Annuity holders should be paid their rate of return, and all should be well. Questions about the safety and liquidity of those investments will continue even though it appears that Delaware Life was able to get a good return on its Lakers investment.
The problem is that there is more interconnectivity in this space than you imagine. If you read the tea leaves, it is clear that this strategy of capital raising and investment has been replicated across many different insurance and annuity companies. The greater fear is that this becomes systemic and then you have a lot of annuity companies trying to sell assets to raise cash at the same time.
What Should You Do?
So, what do you do if you have any questions about the annuity that you own? I would suggest speaking with an experienced advisor who has a deeper understanding of the annuity marketplace so that they could give you guidance on the risks associated with your particular annuity. Annuity is regulated and backed by each state individually based upon the state where your annuity was purchased. I would suggest familiarizing yourself with the annuity guidelines that relate to your annuity.
Disclaimer:
This information is provided for general informational purposes only and does not constitute legal, tax, or investment advice. Investors should consult with appropriately qualified professional advisors before making any investment or planning decisions.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Patrick Maguire and not necessarily those of Raymond James.
A fixed annuity is a long-term, tax-deferred insurance contract designed for retirement. It allows you to create a fixed stream of income through a process called annuitization and also provides a fixed rate of return based on the terms of the contract. Fixed annuities have limitations. If you decide to take your money out early, you may face fees called surrender charges. Plus, if you’re not yet 59½, you may also have to pay an additional 10% tax penalty on top of ordinary income taxes. You should also know that a fixed annuity contains guarantees and protections that are subject to the issuing insurance company’s ability to pay for them.
