Assumed Interest Rate (AIR)

An annuity is an investment that involves you paying an insurance company a large lump sum of money upfront. Then, at some point down the line, the insurance company starts paying you smaller payments at regular intervals (like every month). Fundamentally you are buying a stream of retirement income.
On the backend, the insurance company takes the big chunk of money you paid it, combines that with all the other chunks of money it has, and then invests it. The goal for the company is to make more investing your money than it will have to pay out to you in the pre-agreed regular payments that it now owes you.
To figure out the pricing of the annuity, the insurance company uses an assumed interest rate. Basically, smart folks at the company figure out what a reasonable likely interest rate would be over the period of time the annuity will likely cover. This is plugged into whatever other equations they use to calculate margin (to themselves) and returns (to the annuitant). Eventually, the algorithms spit out some numbers, telling them how much to ask you to pay and how much they should be willing to pay out.