Celebrity Position Review Topic: Buffett on Annuities Last updated: 2026-06-27

Warren Buffett on Annuities

TL;DR: Warren Buffett rarely speaks about consumer annuities. But Berkshire Hathaway owns several annuity-issuing carriers (Berkshire Hathaway Life of Nebraska, General Re Life, GUARD Insurance). Buffett's company collects and invests "insurance float" — including float from annuity reserves — as the cornerstone of Berkshire's investment edge. What Buffett buys (annuity-issuing carriers) tells you more than what he says (almost nothing publicly). Below: the insurance-float mechanism, the consumer takeaway, and the limited public quotes that exist.

What Buffett actually owns in the annuity business

Berkshire Hathaway's insurance operations include several entities that write or reinsure annuities:

Berkshire entity	Annuity activity	AM Best rating
Berkshire Hathaway Life Insurance Co. of Nebraska	Writes structured settlement annuities; some life products	A++ Superior
General Re Life Corporation	Reinsures large blocks of life and annuity business globally	A++ Superior
National Indemnity Co.	Holds long-duration insurance liabilities including annuity-like contracts	A++ Superior
GUARD Insurance Group	Workers comp focus, some life/annuity	A+ Superior

Berkshire is not a major direct-to-consumer MYGA or FIA writer. But it is heavily exposed to annuity float through its reinsurance and structured-settlement operations. Buffett doesn't write annuities to retirees through his agents — but he absolutely owns the economics of annuity-reserve investing.

The "insurance float" mechanism — what Buffett buys

Buffett's most famous insurance insight: insurance companies collect premiums today and pay claims (or annuity payments) over many years. The unpaid liability creates "float" — money the carrier holds and invests until the obligation comes due.

For a 10-year MYGA: a 65-year-old hands $250,000 to the carrier today. The carrier pays it back (with interest) starting in 2036. For the next 10 years, that $250,000 is being invested by the carrier in bonds, real estate, and other long-duration assets. The spread between what the carrier earns on those investments and what it credits to the contract is the carrier's profit.

Buffett calls this "negative-cost financing" — he gets to invest other people's money for free or at a low cost. Berkshire's annual reports detail roughly $160-175 billion of insurance float as of 2025. A non-trivial portion is annuity-related.

The consumer takeaway from Buffett's behavior

If the world's most successful investor pays large sums to acquire annuity-issuing carriers because of their float economics, that tells you the underlying business model is durable. The carrier collects $250K from a buyer, invests it for 10 years at 6-7% in long-duration bonds, pays the buyer back with 5-6% interest, and keeps the spread.

That spread is the structural reason MYGAs can pay 100-200 bps above bank CDs. The carrier is doing exactly what Buffett does: putting other people's money to work in higher-yield, longer-duration assets while managing claim/payout timing.

This is why MYGAs are not a fee-loaded scam. The economics are clean: bond duration plus tax wrapper minus modest spread equals the consumer's yield.

What Buffett has actually said about consumer annuities

The on-record quotes are sparse. He has not publicly recommended for or against consumer annuities. His Berkshire annual letters discuss insurance float economics broadly but rarely touch on retail MYGAs or SPIAs.

One indirect Buffett position: he has long criticized variable-annuity-style products that wrap mutual funds in high-fee insurance wrappers. His critique aligns with Ramsey and Orman on VAs, but it comes from a different angle — Buffett's objection is fee drag versus tracking-error of the underlying. He has not extended that critique to MYGAs or SPIAs.

The closest Buffett gets to direct consumer annuity discussion: structured settlements. Berkshire's structured settlement annuity business is one of the largest in the U.S. Buffett has described structured settlement annuities as a sound way for accident victims to receive guaranteed long-term income — functionally identical to a SPIA.

What Berkshire's reinsurance activity tells us

General Re reinsures large blocks of life and annuity business from primary carriers worldwide. When a primary carrier writes a $100M block of MYGAs, they often cede part of that risk to a reinsurer like General Re. Berkshire collects premium on those cessions and pays claims as they come due.

For Buffett to enter the annuity reinsurance business at scale means he believes the long-term economics of annuity reserves work. He wouldn't deploy billions into reinsuring annuities if he thought the underlying contracts were structurally bad business.

This is "revealed preference" investing: don't watch what Buffett says, watch what he buys.

The Buffett vs Ramsey contrast

Ramsey says "annuities are bad" and never owned an annuity-issuing carrier. Buffett says almost nothing about annuities publicly but owns several. The action gap matters more than the rhetoric.

If annuities were really fee-loaded scams that destroyed consumer wealth, Buffett's insurance subsidiaries would be exiting the business, not expanding it. The fact that Berkshire keeps buying annuity float is itself an endorsement of the carrier's economics — which is what makes the consumer-facing MYGA yield work.

How to use Buffett's framework when shopping for an annuity

Pick the strongest possible carrier. Buffett's edge is buying companies with durable competitive advantages and strong balance sheets. Same applies to your MYGA selection — A or A+ carriers only.
Match duration to need. Buffett matches insurance liabilities to investment duration. You should match your MYGA term to when you actually need the money.
Ignore the fee scare on simple products. Buffett doesn't object to insurance economics; he profits from them. The spread the carrier keeps on your MYGA is the same spread Buffett collects on Berkshire's float. It's not a hidden fee — it's how the system works.
Be skeptical of complexity. Buffett's "I don't invest in what I can't understand" applies. Variable annuities and multi-rider FIAs fail this test. MYGAs and SPIAs pass it.
Don't buy from a captive agent who only sells one carrier. Buffett invests across the best companies he can find; you should shop across the best carriers you can access.

Why this matters for the average annuity buyer

Buffett's silence on consumer annuities is not an endorsement and not a rejection. His investment activity tells you the underlying business is sound. Combined with Orman's pragmatic SPIA/MYGA position and Ramsey's accurate VA critique, the rational consumer position emerges:

SPIAs and MYGAs from top-rated carriers: legitimate financial products with clean economics
Variable annuities: usually fee-burdened versus alternatives
Complex FIAs with multiple riders: require careful review
Buffett-owned reinsurance: tells you the carrier-side economics are durable

The conclusion is not "Buffett endorses MYGAs." It is: the smartest investor in the world thinks the carrier side of the annuity business is good business. That's the substrate that makes the consumer side work for the right buyer.

Buy annuities the way Buffett buys insurance carriers

Independent review of your specific decision.

Buffett picks the strongest carriers, matches duration to need, and ignores complexity. Apply the same framework to your annuity decision: A or A+ rated carriers only, term matched to actual need, and walk away from any product you can't explain in 30 seconds. Get an independent review of your specific options.

Hans Goldstein · 213-414-2808 · NPN 20602398, independent licensed insurance producer appointed with multiple A-rated carriers

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Frequently Asked Questions

Does Berkshire Hathaway sell annuities directly to retirees?

Not in volume. Berkshire's annuity exposure is primarily through structured settlement annuities (court-ordered payouts to accident victims) and reinsurance of other carriers' annuity blocks. They are not a major direct-to-consumer MYGA or FIA writer.

Has Buffett ever recommended buying or avoiding consumer annuities?

No public on-record recommendation either way. His writings discuss insurance economics broadly but rarely touch on retail consumer annuities. The closest he comes is criticizing high-fee mutual fund wrappers, which aligns with the variable-annuity critique.

Why does Buffett own annuity-issuing companies if he doesn't recommend them?

Because the carrier-side economics (collecting premium, investing the float, paying out over decades) are profitable. Buffett invests in the carrier business; he doesn't take a public position on whether buyers should purchase the contracts. These are separate questions.

What is 'insurance float' and why does it matter to me as an annuity buyer?

Float is the money insurance companies hold between collecting premium and paying claims. Buffett's edge comes from investing float at higher returns than the cost of generating it. The same mechanism is why MYGA carriers can pay you 5-6% — they're investing your premium in 6-7% bonds and keeping the spread.

Should I buy a Berkshire-owned annuity if one is available?

Berkshire's consumer-facing annuity volume is small. If you specifically want a Berkshire-rated product, structured settlements are the main retail-adjacent option, but those are typically court-ordered, not voluntary purchases. For voluntary MYGAs/SPIAs, look at the broader A+ rated carrier universe.

Does Buffett think the SPIA is a good product?

He has called structured settlement annuities (functionally identical to SPIAs) a sound way to provide guaranteed lifetime income for accident victims. That's the closest he comes to endorsing the SPIA concept — and it's a meaningful endorsement when read in context.

Are Buffett's views on insurance fees the same as Ramsey's or Orman's?

Partially. All three criticize fee-loaded variable annuities. Buffett focuses on the spread between investment return and carrier cost; Ramsey and Orman focus on the consumer's annual fee load. The conclusions overlap on VAs but Buffett never extends the critique to MYGAs.

What's the takeaway for a 65-year-old considering a MYGA?

Buffett's behavior tells you the carrier-side economics are sound. That makes the MYGA structurally legitimate. Pick an A+ rated carrier, match the term to your actual need, and ignore complexity-heavy products. That's the Buffett-flavored framework applied to your decision.