Annuity FYI Blog

LIMRA just released annuity sales results from the fourth quarter of 2010 and the total year results, according to Ruthie Ackerman’s article in the Financial Times. “Who Were the Top 20 Annuity Writers in 2010?” summarizes the top sellers.  Total annuity sales were published along with totals for sales of variable annuities and fixed annuities.  Of the top 20, half of them had sales increases over the previous year.  The top three sellers of variable annuities reached sales records, while 70% of the top variable annuity companies saw overall sales increases in 2010.

Prudential Annuities had both the most annuity sales and the highest sales for variable annuities.  They were number one with total annuity sales of $23.3 billion and variable annuity sales of $21.7 billion.  They were fourteenth in their sales of fixed annuities.  Allianz Life of North America sold the most fixed annuities, selling $7.1 billion.  They came in seventh in total annuity sales and thirteenth in variable annuity sales.

The top 20 companies accounted for 80% of total annuity sales, 93% of variable annuity sales, and 74% of fixed annuity sales.  Rounding out the top 10 companies in total annuity sales after Prudential were MetLife, Jackson National Life, TIAA-CREF, AIG Companies, Lincoln Financial Group, Allianz Life, New York Life, RiverSource Life Insurance, and ING.  Many of the top 10 annuity sellers also made the top list for variable annuities and fixed annuities.  In addition to those already mentioned, AXA Equitable and Nationwide Financial were in the top 10 for variable annuities.  For fixed annuities, AVIVA, American Equity Investment Life, and Great American were also in the top 10.  LIMRA’s report shows the entire top 20 list for each investment.

The editors at Retirement Income Journal put together “The Bucket,” an article summarizing Financial Engines’ third quarter financial results.  The investment management company which gives retirement planning advice to employees saw a 45% increase in the assets they manage and a 31% increase in revenue this quarter over the third quarter of 2009.  The article highlights the successes of the insurance companies that Financial Engines works with.

Jackson National Life sold more variable annuities in the first three quarters of this year than they have in any whole year in the past.  Their Perspective II showed large sales increases and was the top selling variable annuity in the retail sector for the third year in a row.  Although their sales of fixed indexed and fixed annuities declined slightly due to lower interest rates, Jackson maintains a strong presence in the sales of both products which helps preserve their capital.

Allianz Life Insurance Company of North America had an increase of 36% in their sales of fixed indexed annuities and a 275% increase in variable annuity sales over the third quarter of last year.  The Inflation Protector variable annuity from Penn Mutual, blogged about in a previous post, is expected to be a hot new product in the marketplace.  American Equity Investment Life Holding Company showed an increase in annuity sales, based on what they believe is an increased demand for safe investments to counteract a volatile market.

This brief summary of the companies working with Financial Engines gives a positive outlook to their working relationships with investors and employees.  Much more can be found in the original article detailing even more changes that have occurred this third quarter of 2010.

Thanks to an increase in equity indexed annuities sales, American Equity Investment Life Holding Co. had a third quarter increase in their net income.  The Associated Press article, “American Equity posts $20.5M in 3Q net income,” is from Bloomberg Business Week.  After a net loss last year at this time, American Equity is pleased to report the profitable net income of $20.5 million for the third quarter.  Although their 33 cents per share was less than Wall Street anticipated for them, an increase is great especially after last year’s third quarter loss of $3 million and 5 cents per share.

Their operating income fell slightly to $27.6 million, down from $28.2 million from this time last year.  That lowered their per share price to 45 cents from 47 cents.  Wall Street had anticipated 46 cents per share, so while the actual number was less it wasn’t too far off.  Because the market is still volatile and annuity rates are steady compared to lower rates being offered on competing products, American Equity believes that investors are turning more to their safe products.  Their quarterly revenue was up 12% at $383.5 million and their net investment income jumped to $260.5 million from $241.5 million.  American Equity out of Des Moines, Iowa is pleased with their third quarter numbers.

According to Investment News’ article “NY Life tops 2Q list of fixed-annuities sellers” by Darla Mercado, fixed annuity sales increased from the first quarter of this year to the second quarter.  With sales of $19.4 billion in the second quarter, fixed annuity sales increased 18% from the first quarter but went down 30% from last year.  New York Life Insurance Co. sold $1.74 billion of fixed annuities to nab the top sales spot.  Allianz Life Insurance Co. of North America had the second largest fixed annuity sales of $1.68 billion.  With sales of $1.61 billion, Aviva USA had the third highest sales.  AIG’s subsidiary Western National Life had the fourth highest fixed annuity sales of $1.29 billion, while the fifth highest sales of $1.05 billion were from American Equity Investment Life Insurance Co.

Many believe that the widening spread between fixed annuity rates and Treasury rates is accounting for the increase in fixed annuity sales.  The wider spread also makes it more profitable for insurance companies to handle fixed annuity business.  While fixed annuities have been harder to sell recently, there has been quite an increased interest in fixed indexed annuity products because of their cap rates.  Variable annuities have also seen a sales increase, according to multiple reports.  The $34.4 billion of variable annuities sold this past quarter was an increase from $31.8 billion last year.  New variable annuities sold this quarter totaled $6.22 billion, up from $6.14 billion last quarter.  An increased interest in both variable and fixed annuity products means that investors are looking for secure ways to ensure that their income lasts for the remainder of their lifetime.

It looks like the battle is over for fixed indexed annuities and other indexed annuity products.  The U.S. Securities and Exchange Commission said they would have to reevaluate their information after the U.S. Court of Appeals vacated the SEC’s Rule 151A.  The SEC had hoped to get indexed annuities classified as securities so they would be put under the SEC’s jurisdiction.  According to National Underwriter’s “Rater: Indexed Annuity Ruling Will Stick,” Standard & Poor’s Ratings Services believes that the SEC will not pursue their indexed annuity fight, at least for the next year and a half.

After the Court of Appeals announcement, President Obama signed H.R. 4173 forbidding the SEC from claiming jurisdiction over fixed indexed annuities and other annuity products in the general account of insurance companies.  The rule is known as the Dodd-Frank Wall Street Reform and Consumer Protection Act bill and states that you cannot compare annuities to the other stock market products that the SEC is in charge of.  Without H.R. 4173, the SEC’s Rule 151A would have taken effect next January.  Standard & Poor’s announced with their outlook improvement for American Equity Investment Life Holding Company that it is unlikely the SEC will revisit this issue in the next couple years, if at all.