Annuity FYI Blog

Investment News‘ Darla Mercado summarizes the variable and fixed annuity sales of 2009 in her article “Banks’ annuity fee income rose, FA sales fell in ’09 3Q.”  Through the first three quarters of last year, bank holding companies saw the fee income from their annuity sales increase.  The sale of fixed annuities however, decreased in the third quarter due to their decline in popularity through 2009.  With $2 billion in fee income from variable and fixed annuity sales during the first three quarters of 2009, banks saw a 2.5% increase from the same time frame during the previous year.  Commissions increased 4% during the third quarter, according to a report of the top 922 bank holding companies.  Overall, 71% of the largest banks accounted for almost 95% of the total annuity commissions.

Wells Fargo held the top spot even though their income was actually down from the comparable period in 2008.  In second place was JP Morgan Chase & Co who also saw a decline from 2008, albeit a small one.  Regions Financial Corp. and Bank of America Corp. saw the largest gains in annuity fee income during the three quarter time period.  Western National Life was the largest seller of fixed annuities, despite the product taking an overall decline in the third quarter.  Three companies made their way onto the top 10 list of bank annuity sellers last year.  Jackson National Life Insurance Co., ING USA, and Hartford Life Insurance Company came onto the top ten list in 7th, 8th, and 9th places.  Annuities hold strong as important financial products, despite some declines in the fixed annuity sales.

According to Investment News, ING is replacing their variable annuity product with a more simplified version.  In “ING to sell stripped-down VA with stripped-down commission,” Darla Mercado gives details about the new product.  As of March ING will no longer market its traditional variable annuities.  Their new variable annuities will pay out a level commission that is 75 basis points.  Typical variable annuities have a trail commission of around 1% so ING’s new product will be less than that.

Advisers may first look at these lowered commissions and see less money in their pocket.  But most likely these lower commissions will draw in more customers and be able to generate more sales.  Variable annuity fees for the traditional product have recently hit highs of 3-4% in the market.  ING believes there is a strong possibility that traditional annuities will soon be pushed out of the markets.  They think that the market is going in the direction of these new “stripped-down” annuities with lower fees and commissions.  While ING’s variable annuity has a 5-year surrender period, income receipt can begin immediately.  They also have a feature where the annuity payment increases as the owner’s age increases.

ING Life Insurance and Annuity Company introduced roundtable discussions for their mid market consultants and advisors, according to a company press release via PR Newswire.  They consider the mid market employers to be those with retirement plan assets between $20 million and $150 million.  These roundtable talks held by ING’s U.S. Retirement Services branch are meant to educate and build relationships within their mid market arena.

The first meeting for the consultants and regional investment advisors (RIA’s) was held June 9 in Washington D.C. with more to come in the upcoming months.  ING seeks to remain an industry leader by discussing topics such as overseeing investments, keeping up on trends within the industry, and the possibility for these mid market advisors to grow into larger plans.

A large summit is also being held on the 9th and 10th of September for even more industry partners.  ING’s new Framewor(k) product seeks to make the relationship between their clients and partners simpler.  They realize the unique needs of their mid market sponsors and seek to offer products meeting those needs, such as their Framewor(k) product.

ING USA just significantly raised the rate of their Guarantee Choice fixed annuity. The 5-year rate is currently 4.20% for greater than $75,000 (4% for less than $75,000). Act now to lock in this great rate, which is likely available only for the next week, when ING USA reviews its rates again. Request an investor kit and complete information about this fixed annuity, or call 866-223-2121 to speak with an Annuity FYI Expert!

The U.S. Annuity business of ING Group NV has a new chief financial officer/chief insurance risk officer, according to Matt Ackermann at American Banker.   This was announced on Thursday after a recent company change to low-cost and simple retail annuity products. Michael Smith will be working for ING at the company’s offices in WestChester, Pa.  He comes from 21 years at Lincoln Retirement Solutions where he was in charge of both risk management and profitability.  The CEO of ING’s U.S. Annuity business, Bill Low, will be Smith’s direct boss.  Mr. Smith will take charge of all financial and actuarial operations related to his new business.