Annuity FYI Blog

According to a recent survey, investors are quite uncertain with the retirement issues surrounding them and could use more help from advisors.  Danielle Andrus of Advisor One says that many people are not happy with the support offered from their employer’s retirement plan in her article “Unsatisfied and Uncertain–Investors Need Advisors’ Help: Retirement Report Roundup.”  Cogent Research’s study of investors found that more than half were unhappy with their current situation and need advisors’ help transferring 401k annuities and other retirement savings plans.  Those who are happy with their current employer plans are three times more likely to roll their money over with the same company holding their 401k or 403b plans.  Investors were most satisfied with Fidelity, Wells Fargo, Vanguard, Merrill Lynch, and Charles Schwab.

LIMRA research has found that half of pre-retirees have not even considered the possibility of outliving their income.  Fewer than one third of those set to retire in the next three years actually have a written retirement plan in place.  Advisors will be able to help pre-retirees and retirees make decisions to carry their savings throughout their lifetime.  Annuities with guaranteed living benefits have been increasing steadily and were up 8% in 2010.  With $81 billion in sales of annuities with guaranteed living benefits in 2010, the total assets of variable annuities carrying that rider went to $521 billion during the fourth quarter of last year.  New annuities with these riders were introduced in 2010 by Hartford, Principle, and Protective.  Our experts can help you with 401k annuities and guaranteed living benefit riders that will make your money last over your lifetime.

MetLife is one of the top life insurance companies, and their annuity products are a big reason why.  According to “MetLife Annuities See Positive Outlook” by Errol Baddoo of the Annuity News Journal, the company’s annuity sales are soaring.  While they didn’t take first place in annuity sales in 2010, MetLife’s annuity sales of almost $21 billion made the top 5.  Their variable annuities sold $18 billion in 2010, a 19% increase from 2009.  While fixed annuity sales declined by 65%, they still accounted for around $2 billion in sales for MetLife.  Fixed annuities skyrocketed in popularity during the recent economic crisis because of their stability in a volatile marketplace.  As the economy has improved and variable annuities have increased in popularity, it only makes sense to see somewhat of a decline in fixed annuity sales.

MetLife’s newest variable annuity, a joint force with Fidelity Investments, is called the MetLife Growth and Guaranteed Income variable annuity.  In its first 12 months in the marketplace, this new variable annuity accounted for $1 billion in sales.  Some of MetLife’s other products include multiple annuity offerings like the 401k annuity, life insurance, other insurance plans, and a plethora of other retirement plan options.  Their biggest competitors are AIG, Hartford Financial, and Prudential Financial, the last of which took the top spot in annuity sales in 2010 with $23 billion.  MetLife’s stock value of $48.83 is 10% higher than the current market price, according to the Trefis stock price estimate.  Annuity products make up around 17% of the stock value for MetLife.  The company expects their newest variable annuity and other annuity products to add even more sales in 2011.

According to NASDAQ article “Positive Outlook for MetLife Annuity Sales,” the Trefis Team says that MetLife’s new variable annuity has accounted for over a $1 billion in sales in just one year.  MetLife teamed up with Fidelity Investments to offer the MetLife Growth and Guaranteed Income (MGGI) variable annuity, which is very popular among investors.  MetLife offers many different annuities, insurance products and retirement plans.  Their main competition comes from Prudential, AIG and Hartford.

The Trefis Team estimates MetLife’s stock price at $48.83 and they say that 17% of that can be attributed to the company’s annuity sales in the U.S.  That price estimate is about 10% higher than the market price because of MetLife’s improved outlook.  They had the second highest annuity sales in 2010, selling close to $21 billion.  Variable annuity sales were more than $18 billion and fixed annuity sales were just over $2 million.  Although MetLife saw a decline in fixed annuity sales, their variable annuity sales increased by 19%.  Prudential was the only company to have higher annuity sales in 2010, with sales over $23 billion.

Fixed annuity sales saw a large decline last year partly because of the large increase they saw in 2008 and 2009 during the economic crisis.  Investors were looking for less risky investments and sought the comfort of fixed annuities.  As investors switched back to taking on more risk, they went back to variable annuities hoping to see large increases in their investments.  Overall variable annuity sales in the market increased 11% in 2010, while fixed annuity sales decreased.  The total annuity premiums for MetLife last year were $875 million, which was an increase of 40% over their total annuity sales in 2009.  The Trefis Team expects continued growth in annuity sales for MetLife.

With the hiring of Steve Kluever from Jackson National Life Insurance Co., The Hartford Financial Services Group Inc. hopes to increase sales of their variable annuities.  Investment News’ Darla Mercado writes about the surprise transition in “The Hartford nabs VA exec from Jackson.”  Since Hartford and Jackson have taken very different approaches to business following the financial meltdown of the past few years, many industry insiders were surprised by this transfer.  Kluever will head a new position at Hartford as the vice president of annuity product and marketing.  In 2006 Hartford was the fourth largest seller of variable annuities, but fell drastically after the economy went sour.  They hope to come back from their significant variable annuity hedging losses with this new hire and position within the company.

Hartford was in 20th place last year in their sales of variable annuities, quite a jump from their fourth place status four years prior.  Jackson, on the other hand, was the third largest variable annuity seller, likely due to their approach to product development in the past few years.  Jackson’s financial advisors and clients have around 100 variable annuity subaccounts from which to choose, while Hartford chose to lessen the risk in their product line.  While Hartford has to be careful about the changes they are making to increase their variable annuity presence, they are starting slowly by adding annuity wholesalers and enhancing their Personal Retirement Manager variable annuity soon.  Working 401k annuities into their plan might also be an effective way to increase sales since even the federal government is suggesting these retirement products to help Americans combat longevity risk.

While more Americans than ever are depending on Social Security to fund their retirement, most of those recently surveyed don’t think that the money they receive will be enough to live on.  The study was performed by Hartford Financial and could mean big business for their annuity sales.  Annuity News Journal’s article “Social Security Becoming More Important” by Errol Baddoo highlights the results of Hartford’s survey.  Forty percent of those surveyed think that Social Security will be their most important source of retirement income, but eighty-five percent of people don’t think that Social Security will cover all of their living expenses.  This discrepancy means that Americans need another way to finance their retirement to supplement Social Security payments.  Hartford Financial and other insurers hope that annuity products will be that bridge.

Seventy-five percent of those surveyed think that it is their own responsibility to plan for their retirement and are not expecting the government to carry them through.  Purchasing an immediate annuity with savings, 401k, or other funds can help cover basic living expenses in retirement.  Hartford and other insurers have options for fixed annuities, variable annuities, indexed annuity products and others that allow investors many options with low risk.  The recent decline in the economy has made Social Security even less attractive because of tremendous losses.  Annuity products are expected to have a large increase in sales going forward as investors look for products with both lower risk and better guarantees.  Decreases in annuity sales in 2008 and 2009 have already led to increasing sales in 2010.