Who bears the investment risk in a fixed annuity?

In the context of a fixed annuity, the investment risk is borne by the insurance company. This type of financial product guarantees a set rate of return to the annuity holder, which means that regardless of market performance, the annuity holder is assured a steady income stream or interest payments. Because the insurance company is responsible for paying out these guaranteed amounts, they assume any risks associated with the investment of the annuity funds. This involves managing the investment portfolio to ensure that funds are available to meet the promised returns to annuity holders, regardless of market fluctuations.

The other choices incorrectly assign the risk. The annuity holder does not bear the investment risk since they are guaranteed a fixed return. The stock market, while it can impact an insurance company's investments, does not bear risk in relation to a fixed annuity. Finally, an issuing broker’s role is more about facilitating the sale of the annuity rather than involving them in the investment risk associated with the annuity itself. Thus, the insurance company's responsibility for the investment performance leads to them bearing the risk in a fixed annuity.