Guaranteed investment contracts
(GICs) are fixed assets with no appreciation potential but which provide income.
A16, "Synthetic Guaranteed Investment Contracts
" which was cleared in Mar.
* Insurance companies are concerned about (i) liquidity problems emanating from their guaranteed investment contracts
and (ii) existing mortgages on properties having significant lease rollovers.
First Executive's greatest growth didn't come from traditional, or even semitraditional, life insurance product but from single-pay products like annuities and Guaranteed Investment Contracts
, which involve only one large premium payment up front.
Such investments are typically guaranteed investment contracts
(GICs) and bank investment contracts (BICs).
Some of these companies were using guaranteed investment contracts
, that is, the promises life insurance companies make to provide a specific yield over time typically to a pension fund, as the source for acquiring bonds as well as placing mortgages.
The report, which is based on 2012 data, found investors in their 20s have 11% of their assets in safe investments, including guaranteed investment contracts
, stable value funds, money market funds and bonds.
* Synthetic guaranteed investment contracts
that are fully benefit responsive.
The 2012 PLANSPONSOR Defined Contribution (DC) Survey asked sponsors what was used as their plan's automatic enrollment default investment (see "Default Investment Options in Auto-enrollment Plans," above, right); 18% of sponsors (see "Use of Non-QDIA Investments - by Asset Size," at left) have non-QDIA investments: stable value funds and guaranteed investment contracts
(GICs) (5.7%), money market funds (6.9%) and other (5.4%).
In reality, most synthetic stable value products use three or more synthetic GICs (guaranteed investment contracts
), so investors' risk exposure to the insurance company or bank is even less.
Best # 59197) confirmed last month that it has received subpoenas from Florida and Connecticut in connection with a multistate investigation of alleged bid-rigging in the sale of guaranteed investment contracts
([dagger]) Includes guaranteed investment contracts
(GlCs), pooled GlCs, separate account GlCs, synthetic GlCs, traditional bank investment contracts and short-term investment funds (Although GlCs have come under fire in the past year, Buck's Richard Koski said he did not expect this to have an appreciable impact on the percentage of 401 (k) plan sponsors that will offer GlCs as an investment option "Sponsors want to have a fixed-income type of vehicle under their plans and these are still the most common of this type The problem cases are still few and far between; sponsors will be more selective in picking their providers.")