Annuity FYI Blog

While Aviva USA’s parent company has a long history abroad and even some in America, it’s growth in the four years it has been working out of Des Moines is substantial.  According to The Des Moines Register‘s David Elbert, (the) “Insurer’s roots go back to Newton, (Isaac that is.)”  Aviva USA just opened the new Des Moines headquarters and they are hoping to organically grow along the rate that they have for the past four years.

Aviva’s US operations were sold in 2001 because the London based company was not seeing profit from them.  At the time, the company was not yet known as Aviva; that came after a series of mergers in 2002.  Although Aviva was one of the biggest insurance companies in the world, they did not come back into the US until 2006 when they bought AmerUs Group of Des Moines for $2.9 billion.  Since AmerUs was a leader in the sale of equity indexed annuities, then a relatively new investment, the company was attractive to Aviva.  The other reason they liked AmerUs so much was that they had a large network of insurance agents nationwide who were independent and loyal.  This investment in AmerUs brought about Aviva USA.

Since 2006, Aviva USA in Des Moines has grown from AmerUs’ 600 employees to the 1,300 who just relocated to the company’s new $150 million home office located in West Des Moines.  Aviva USA has grown between 30 and 40 percent each year and hopes to continue growing at a rate of around 10 percent a year through organic growth rather than acquisitions.  Aviva USA’s annuities sales and life insurance products have kept them financially strong during the recent economic turmoil.  While AmerUs was unable to compete in the large sales channel controlled by BGA’s (brokerage general agents), Aviva as the sixth largest insurer does not have that problem.  They are expanding and growing at a significant rate.

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.

Aviva USA has a new executive vice president of insurance operations.  The company, based in Des Moines, is part of the fifth largest insurance group in the world, Aviva plc.  By introducing Christopher R. Welp into this position on August 30, Aviva plans to keep their company moving forward.  As one of the leading sellers of fixed indexed annuities and life insurance, Aviva USA has almost a million customers and employs 1,500 people in America.  Welp will be in charge of all of the insurance operations for Aviva USA, as well as help to develop and implement all company initiatives.

He will be involved with the company’s customer service, new life and annuity business, underwriting, administration, agency services and more.  Aviva USA is proud of their customer based company and believes that Welp’s history of excellent leadership throughout his career will help them meet their full potential in the United States.  They plan to grow their life and annuity business and always strive to evolve and make their customer experiences better.  Welp came from ING’s annuity business and has been a longtime resident of Iowa, participating in many organizations.  Aviva USA and Christopher R. Welp are excited about their new endeavor.

With $30 billion of sales in 2009, indexed annuities set a record for the highest sales of all time, according to “2009 Indexed Annuity Sales Set Record” from Insurance News Net.  The previous record from 2007 was beat by close to 10%.  Data representing 99% of the companies selling indexed annuities was collected by Annuity Spec’s Indexed Sales and Market Report.  While 4th quarter indexed annuity sales were down from the third quarter, sales levels were adjusting back to a normal level after their record highs.

Allianz Life remained in the top spot for total 2009 sales, as well as staying in the #1 carrier position in the market.  Their MasterDex X held its position as the top selling indexed annuity for the third quarter in a row.  Indexed annuities are tied to the markets, proving that their annuity rates were popular to investors.  After Allianz Life, Aviva moved up to the second spot in this annuities market.  The third, fourth, and fifth spots were occupied by American Equity, Jackson National, and ING.  In regards to bank and wirehouse 4th quarter distributions, Jackson National Life had the most indexed annuity sales.

According to Karen Mracek’s article in the Des Moines Register, “Aviva’s sales (were) down in ’09; but business is picking up.”  Aviva USA is headquartered in Des Moines and their parent company Aviva is based in London.  While the company showed an overall sales decline of 17% in 2009, their sales in the fourth quarter were up 14%, showing that they are indeed on the rise.

Aviva planned to reduce it’s annuity business after many companies were hit hard with losses in variable annuities during the most recent economic downturn.  However, the demand for their annuities was much greater than they had anticipated so they worked on updating their company goals.  While Aviva’s annuity sales declined 27% for the year, they showed a 44% increase in the fourth quarter of 2009.

The company believes that its customers have faith in Aviva as one of the stronger forces in the market and that is why they chose to do their annuity business with Aviva.  Aviva’s life insurance sales increased both for the year and dramatically in the fourth quarter.  They remain focused on profitably growing their business in annuities and other insurance products throughout 2010.