Trying To Sell 19 Year Annuity At Discount...any Ideas?

WECpoker · 09-19-2009, 05:43 AM

Hi, I hope this is the appropriate place for this post.

I received an immediate 19 year annuity that pays $9,000 per year in May of each year (next payment 2010--total of payments $171,000) written by Genworth Insurance. The Present Value in May was calculated at $113,000. I am trying to sell this annuity at a fair discount so I can receive a lump sum, and whoever buys it can get it much cheaper then if they buy an annuity directly from the Insurance Company. Arizona Law allows transfers of Annuities so that would present no problems (and the insurance contract allows for them).

After research I have discovered the following:

1) There are many firms the will buy these annuities (and structured settlements, lottery winnings, etc), but they are an extreme rip-off and are basically stealing from people who do not know better
2) I have tried contacting many banks for a loan using the annuity as collateral. Almost all will not even entertain, although banks used to make these loans at one time. I do have one bank considering at the moment.
3) I have attempted to contact Genworth to see if they will buy it back, but they tell me my only option is to sell to a person or entity.

If anyone has any ideas that I have overlooked I would appreciate it!!!! I am thinking of advertising in classified ads in financial newspapers or websites...but if anyone has an idea which would be best I thank you in advance.

insuranceexec · 09-21-2009, 07:34 PM

So what would you consider a FAIR offer to be?

InsureGuy5 · 09-22-2009, 11:19 PM

Yes, most of the professional buyers out there will not give you what you would consider to be fair value for your annuity. Taking out an add might be your best bet.

somarco · 09-23-2009, 12:23 AM

There are many firms the will buy these annuities (and structured settlements, lottery winnings, etc), but they are an extreme rip-off and are basically stealing from people who do not know better

How do you know this?

Selling an annuity isn't that easy (as you have found out). Unless you luck up and find a well heeled private buyer, you will either have to keep the annuity or sell it to an investor such as those mentioned.

A fair price might be 60% of NPV. A great price (for you) would be in the 80% range.

If you find someone willing to pay 80% or so you probably need to buy a few lottery tickets that day since that is truly your lucky day.

WECpoker · 09-23-2009, 04:45 AM

Hi

Thank You for your replies...I appreciate any input
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Originally Posted by insuranceexec

So what would you consider a FAIR offer to be?

Realistic or not...I have come to the calculation that somewhere between 75-90K would be fair for me and a reasonable profit for the investor.

I mean..if you wanted to purchase this annuity from an insurance company it would cost you $113,000 or so.
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Originally Posted by somarco

How do you know this?

Selling an annuity isn't that easy (as you have found out). Unless you luck up and find a well heeled private buyer, you will either have to keep the annuity or sell it to an investor such as those mentioned.

A fair price might be 60% of NPV. A great price (for you) would be in the 80% range.

If you find someone willing to pay 80% or so you probably need to buy a few lottery tickets that day since that is truly your lucky day.

Contacted a ton of the annuity buying companies and the offers ranged from 30-50K....which just is too much for me to give up

insuranceexec · 09-23-2009, 06:00 AM

There are so many different variables to consider.

First, you have to realize that the investor will have to wait 19 years to recover their money.

If they give you 90K, and assuming a 6% interest rate; the investor is losing money in the 8th year.

I think that if you are needing immediate cash then you should be looking for around the 50% payout range.

WECpoker · 09-23-2009, 08:41 AM

Originally Posted by insuranceexec

There are so many different variables to consider.

First, you have to realize that the investor will have to wait 19 years to recover their money.

If they give you 90K, and assuming a 6% interest rate; the investor is losing money in the 8th year.

I think that if you are needing immediate cash then you should be looking for around the 50% payout range.

So just to ask a question then...Would you say the fixed immediate annuity business is basically down to about zero?

Are annuities in general a product that doesnt sell anymore? Or is everything Variable Annuity?

sman · 09-23-2009, 04:31 PM

Based on the numbers you have given, an investor giving you $75k would realize a before tax return of 4.44% over that 19 years and if they gave you $90k they would realize a 3.44% pre-tax return.

While those percentages may be acceptable for a short term period, they are EXTREMELY unacceptable for a 19 year time horizon. Your expectations are unrealistic.

As for the question about the immediate annuity business being down to zero, just about. One of the main equations in immediate annuity payouts is the underlying interest rates. And unless you've been hiding in a cave with no access to information, you know that interest rates are at a historic low. I wouldn't recommend anyone doing an immediate annuity right now for that reason.

Your best hope is a loan. I'm surprised that a bank wouldn't offer a loan using the immediate annuity as collateral. Seems to me you could sign some paperwork assigning payment directly to the bank from the annuity payout. Of course, they may prefer to receive their money in monthly installments since that's how most loans work. Can you change your payout to monthly? I would also assume they would want you to have decent credit. How is your credit?

I think you are a little misguided in calling these companies that buy annuities a rip off. As you can see, the returns I posted aren't attractive to someone parting with that kind of money for a 19 year time frame. Just out of curiosity, why did you purchase an immediate annuity?

WECpoker · 09-23-2009, 10:37 PM

Originally Posted by sman

I think you are a little misguided in calling these companies that buy annuities a rip off. As you can see, the returns I posted aren't attractive to someone parting with that kind of money for a 19 year time frame. Just out of curiosity, why did you purchase an immediate annuity?

I can see your point, and maybe calling them a rip-off is not correct, just not acceptable for what I am looking for is better.

And, did not buy the annuity. Was a freebie, sort of.

briko3 · 09-24-2009, 12:22 AM

Pension buyout?

WECpoker · 09-24-2009, 08:12 AM

Originally Posted by briko3

pension buyout?

Won it actually..but took a lot of work to do so

insuranceexec · 09-24-2009, 08:12 AM

Originally Posted by sman

Based on the numbers you have given, an investor giving you $75k would realize a before tax return of 4.44% over that 19 years and if they gave you $90k they would realize a 3.44% pre-tax return.

While those percentages may be acceptable for a short term period, they are EXTREMELY unacceptable for a 19 year time horizon. Your expectations are unrealistic.

As for the question about the immediate annuity business being down to zero, just about. One of the main equations in immediate annuity payouts is the underlying interest rates. And unless you've been hiding in a cave with no access to information, you know that interest rates are at a historic low. I wouldn't recommend anyone doing an immediate annuity right now for that reason.

Your best hope is a loan. I'm surprised that a bank wouldn't offer a loan using the immediate annuity as collateral. Seems to me you could sign some paperwork assigning payment directly to the bank from the annuity payout. Of course, they may prefer to receive their money in monthly installments since that's how most loans work. Can you change your payout to monthly? I would also assume they would want you to have decent credit. How is your credit?

I think you are a little misguided in calling these companies that buy annuities a rip off. As you can see, the returns I posted aren't attractive to someone parting with that kind of money for a 19 year time frame. Just out of curiosity, why did you purchase an immediate annuity?

Perfectly said! Instead of an immediate annuity an individual is better off going with an income ladder.

padthaiforlunch · 09-24-2009, 02:29 PM

Use it as your side for a prop bet. If your opponent thinks they have the best of it on the prop, then you can value your annuity at a higher rate.

somarco · 09-24-2009, 04:07 PM

Could be a pension buyout, but the more likely is a structured settlement from a civil action. Regardless, at least he has some insight into options.

WECpoker · 09-24-2009, 04:30 PM

Just to satisfy curiousity..it was won in a contest

somarco · 09-24-2009, 04:41 PM

Poker contest . . .?