Annuity FYI Visitor Blog

Deferred fixed annuity sales grew by close to 60% last year, according to an article by Janet Kidd Stewart in the Chicago Tribune.  It’s really no surprise as life expectancies continue to rise and many people’s life savings dwindle.  Northwestern Mutual Life Insurance Company actually has a calculator on their website to estimate your life expectancy, which can help determine how long you need to finance.  A one-time lump sum investment is paid out monthly starting at a date in the future with deferred fixed annuities.

Here are two examples of the updates being made.  The Hartford Life Insurance Company updated their Income Annuity last year by adding the ability to both choose the date payments begin and some option to change that date.  New York Life Insurance company added “The Changing Needs Option” rider onto its immediate annuity product.  This rider gives investors the option to add to their initial payment by up to 5 times if they need to in the future.  They can also decrease the amount by half; both do have a fee attached.  These updates are meant to help ensure that you do not outlive your finances.

After severe fourth-quarter losses, annuity provider Lincoln National has decided to enter a reinsurance agreement with Commonwealth Annuity and Life Insurance Co. The Wall Street Journal’s Kerry E. Grace writes that the plan will result in capital relief of around $240 million.

Details of the agreement between Lincoln and Goldman Sachs subsidiary Commonwealth are as follows:

• Lincoln will re-insure $1.5 billion of its reserves (solely a closed block of life insurance policies) to Commonwealth
• Commonwealth provides quota-share coinsurance of 55%

Last week, Lincoln (also known as Lincoln Financial) withdrew its application to issue debt under the FDIC Temporary Liquidity Guarantee Program. However, they may still receive some government assistance: Lincoln is now eligible for U.S. Treasury funds, since its’ application for a savings-and-loan charter has been approved.

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)

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.

Limra International says that fixed annuity sales increased by 79% in the fourth quarter of 2008, according to the Wall Street Journal’s Leslie Scism. The jump is credited to olders individuals fearing that the current market turmoil will torpedo their retirement funds. Fixed annuities are considered far less susceptible to wild swings in value.