With $862 billion invested across a greater majority of defined contribution (DC) plans as of March 31, 2025, stable value is a popular asset class offering capital preservation, steady returns, and liquidity. General account products represent the oldest form of stable value as well as one of the largest segments with $398 billion invested or nearly 50 percent of the asset class.1
The general principle behind a guaranteed interest account (GIA), a general account insurance company product, is that the assets are invested in the insurer’s general account and backed by the full faith and credit of the insurance company. It is important to remember that in the vast majority of DC plans this is the only investment that comes with an insurance guarantee. Therefore, whether considering a GIA for a DC plan or another plan type, it’s essential to evaluate an insurer’s financial strength and expertise – ‘trust but verify’ the full faith and credit - in addition to evaluating the merits of the product itself.
In our paper, “Guaranteed Interest Account Key Considerations,” we share factors to consider. In our view, keys to ascertaining confidence in an insurer's ability to deliver on its commitments include: corporate structure, insurer financial strength, and experience.
Here are some highlights:
Corporate structure. It can be helpful to understand the corporate structure of the offering firm and its history of delivering on its commitments during various economic cycles. Mutual companies, in contrast to publicly held organizations, operate for the benefit of their members and participating policyowners — with a focus on policyowners’ long-term interests which happen to align well with the typical objectives of a GIA as a long-term core holding in portfolios.
Issuer financial strength. Stepping back and taking a broad and holistic view of the insurer can aid in evaluating an insurer’s financial strength. In addition to reviewing current ratings consider reviewing the insurer’s general account and other financials
Consider the goals and the investment strategy of the insurer for its general account, its diversification, and long-term performance. Other financial indicators to review include the insurer’s surplus, total adjusted capital, and dividend payout history.
Experience. Experience and expertise are part and parcel in stable value as in any asset class and it’s essential to uncover the insurer’s years of experience in the stable value areas of the business. Consider the depth and breadth of the experience through different economic events as well as tenure and depth of the team.
Review the insurer’s stable value assets under management and consider whether the business is growing, maintaining, or contracting, and more.
Reviewing an insurer’s corporate structure, financial strength, and experience paired with a review of the provider’s service delivery model can create a holistic picture of the firm’s ability to meet its commitments.
For more details, read the full paper here.
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1Stable Value Investment Association (SVIA), Stable Value at a Glance, 3/31/2025.
Please note, contract terminology can vary from provider to provider. While GIAs offer the benefits of capital preservation, steady guaranteed income, and participant liquidity at book value for participants, risk is an innate characteristic in investing and plan sponsors should evaluate their choices carefully before making a selection. Risks to consider include, and are not limited to: cash flow risk, contract risk, event risk, credit risk, default risk, interest rate risk, issuer risk, liquidity risk, manager risk, market risk, regulatory risk, and tax and accounting risk.
