Annuity FYI Blog

Despite the appeal of annuities to many–as a more secure alternative to typical 401(k) investments like stocks–Janet Kidd Stewart from FOX 4 in Kansas City predicts that they won’t be offered in employers’ 401(k) options any time soon. She believes there are several factors holding companies back from incorporating annuity products into their retirement savings plans, including:

• concerns that it will be difficult for employees to transfer or cash out when they switch jobs
• worries about insurers’ viability in the long term
• employers’ focus on dealing with cutbacks and layoffs has prevented them from making innovations in retirement offerings

More employees are demanding a fixed return for at least part of their retirement investments. That, combined with the advent of flexible and more inexpensive annuity products, will probably result with more employers getting on board eventually as the recession drags on.

The Beacon Research Fixed Annuity Premium Study recently released its results, announcing the best selling fixed annuities of 2008′s fourth quarter.

Top-Selling Fixed Annuity Products of Q4 2008:

1. MetLife Investors’ Fixed Annuity FA
2. MetLife Target Annuity
3. Aviva-American Investors Life Select Bonus Annuity

The top two are market value adjusted annuities, while third place goes to an indexed annuity.

The Beacon Financial Fixed Annuity Value Survey has released its calculations of the top fixed annuity companies during the fourth quarter of 2008, reports Darla Mercado in Investment News. Results were calculated based on insurers’ sales of fixed annuities.

Top-Selling Fixed Annuity Providers in Q4 2008:

1. Metlife ($4.1 billion)
2. New York Life ($2.6 billion, down from first place)
3. Aviva USA ($2.3 billion)

While the value of a variable annuity has sunk along with the stock market, it may actually be a good idea to purchase one soon if you’re interested. Marc Ruiz in the Chicago Post-Tribune points out that the variable annuities currently on the market filed their contracts with regulatory agencies last May, before the current financial crisis. Federal law prohibits insurers from deviating from that contract during the regulatory year, and existing investors will not be subject to the changes afterwards.

Guaranteed minimum income benefits currently available may be discontinued or have higher fees in the future, and annuity rates will probably be less attractive to investors. If a variable annuity is right for you, it may be a good idea to lock in these offers before contracts are adjusted in May.

This week, both State Farm and the National Life Group announced that they will stop selling Phoenix Companies annuities. Diane Levick writes in the Hartford Courant that those firms, which combined made up 82% of Phoenix’s 2008 annuity sales, have made this decision because of Phoenix’s recent ratings downgrade from Hartford.

The firm is already struggling, given its 37% decrease in annuity sales (based on customer depositsw) in Q4 2008.