Date posted: March 24, 2013
I just updated a blog post from October 2010 about Aviva USA. Their newest fixed indexed annuity, TargetBenefit, offers consumers more flexibility and much longed for simplicity. This is the latest in a decade or so of changes made to continue Aviva USA’s growth, especially in fixed indexed annuity product sales. Check out the blog update for the exciting details about TargetBenefit Annuities.
Written by Rachel Summit
Follow Rachel, aka Finance Mama, on Twitter and Google+
Date posted: December 31, 2012
This blog is, in essence, a continuation of yesterday’s blog on what to expect in variable annuity trends for 2013. But this entry deals with the annuity industry as a whole and what we think will be happening next year. Producer’s Web published a Life Health Pro article, “Annuities: 5 things to expect in 2013,” where Maria Wood gives us some hints at changes to come. Some of the changes I talked about that are likely in store for variable annuities will effect all annuities, while others are more specific.
The number one thing that customers want from annuities is guarantees. This is slightly ironic because guarantees are what has hurt the variable annuity industry. But that is why the popularity of fixed indexed annuities is skyrocketing. Companies selling variable annuities have found it difficult to manage their risk with low interest rates, so single premium immediate annuities and deferred income annuities are becoming the products of choice to offer these guaranteed living benefits that customers are looking for.
Hartford, AXA Equitable, and Transamerica have offered variable annuity buyouts to their customers. There is a good chance that this offer of buying customers out of their guarantees will continue into 2013. Carriers are looking for a way to protect themselves from the large amount of variable annuity guarantees they have sold that could affect their future solvency. Asking customers to sell death benefit guarantees or living benefit riders in exchange for an increase in the amount of their account may be good for the insurer, but may not really be the best bet for the customer. Look closely before making one of these variable annuity deals.
How might the fiscal cliff change the nature of annuities? The fiscal cliff is all about taxes and the tax-deferral benefits of annuities could possibly be changed. While some people think this is unlikely, on the off chance that annuities lose some of their tax-deferral bonus, it would really change the industry. Since the government has been working hard to convince people of the importance of retirement saving, I would be shocked if they made it less appealing to buy an annuity guaranteeing lifetime income. We’ll certainly watch this aspect of the fiscal cliff talks closely.
Another thing up in limbo that would really change the annuity industry for advisors is this possible universal fiduciary standard. Organizations like NAFA and NAIFA say that this would border on a catastrophe for the annuity industry. Advisors would have to follow two different sets of regulations and it would be very difficult to license insurance agents with a new fiduciary standard. The annuity industry argues that their suitability requirements for annuity sales are more than enough to keep advisors honest and legal when selling their products.
Private equity asset managers are entering the annuity business, most recently with Guggenheim Partners’ purchase of Sun Life Financial’s variable annuities business. They are rumored to have interest in Aviva USA’s annuity products as well. It definitely remains to be seen what impact these private equity firms will have on the annuity industry and whether it is best for the future. But they certainly have the money to spend and are not leaving the industry anytime soon, so it looks like everyone will have to adapt. These changes for 2013 are partially up in the air based on government decisions, so we’ll keep watch and keep you readers current as things change.
Written by Rachel Summit
Follow Rachel, aka Finance Mama, on Twitter http://twitter.com/#!/financemama
Date posted: August 18, 2012
The second quarter numbers are in and Sheryl J. Moore has compiled a list of the best in the indexed industry. According to Insurance Networking News’ Carrie Burns, the “Top 10 Q2 Indexed Annuity and Life Insurance Carriers” have been released in a new report. Annuity Specs’ 60th “Indexed Sales & Market Report” accounts for the production of 99% of all of these indexed products. Moore, the author of the report, is the CEO and President of Moore Market Intelligence. Indexed annuity sales increased 8% from the first quarter of this year to the second quarter, for a total of $8.7 billion. Indexed life insurance sales went up 19% to $303 million.
Allianz Life Insurance Company took the top spot in fixed equity indexed annuity sales for the second quarter. Aviva, American Equity, Security Benefit Life, and GAFRI rounded out the top five. Some companies were a bit of a surprise in this top 10 list, while others were expected and typically have the highest indexed annuity sales. The remaining companies in the top 10 were Fidelity & Guaranty Life, Midland National Life, Jackson National Life, Lincoln National Life, and North American Company for Life & Health.
Some of the same companies made the list of the top 10 indexed life insurance sellers in the second quarter. At the top of that list was Aviva, followed by AXA Equitable and Pacific Life Companies. The next highest sellers of indexed life insurance were AEGON Companies, National Life Group, National Western Life, and Allianz Life. Finishing out the top 10 list were Penn Mutual, Minnesota Life and American General Life Companies. Based on the growth that we have consistently seen in the indexed annuity and indexed life markets, it is likely that the products will remain strong this year and into the future.
Date posted: April 14, 2012
If you have $1 billion lying around and you’re looking for an investment, you might be able to purchase Aviva USA. Multiple sources have said that the British company’s U.S. business is for sale, according to The Des Moines Register’s Adam Belz. The article, “Aviva would consider sale of U.S. unit; 1,300 employed in West Des Moines,” says that Aviva’s CEO let investors know it would consider offers from those looking to purchase it’s U.S. annuity and insurance business. While he didn’t dispute the claims, Aviva USA’s CEO assured his agents that they would not be blindsided and nothing was currently in the works. With 1,300 people working at the two-year old Aviva USA headquarters in Des Moines, the city has a lot to lose if the company is sold and moved elsewhere.
The reasons Aviva may be looking to sell its U.S. business are just speculation, but some say it’s because low interest rates have hurt the demand for indexed annuity products. Obviously low interest rates in the market mean that Aviva has to offer lower annuity rates on their signature indexed annuity products. Aviva USA increased their operating profit 15% last year to $693 million, but fixed annuity sales in the overall market decreased by 1.1%. An Aviva spokesperson says that fixed indexed annuities still offer a safe return on investment, even with lower interest rates, so it’s anyone’s guess as to why they might want to sell. It’s possible that the British company wants to focus its capital on European and U.K. investments. Regardless of the reasons, if Aviva sells its U.S. business, they will likely receive about half of what they paid for the annuity and life insurance business six years ago.
Written by Rachel Summit
Follow Finance Mama on Twitter http://twitter.com/#!/financemama
Date posted: July 31, 2011
American Equity Investment Life Holding Co. CEO Wendy Waugaman was interviewed in the Des Moines Register article “W.D.M. firm’s CEO talks of annuities, economic growth.” American Equity has the second highest sales of fixed equity indexed annuities, just above Aviva USA and behind Allianz Life. The company was started in 1995 and went from selling $150 million of annuities in 1997 to $2 billion in 2001. Their revenue is now up to $28 billion, largely based on sales of fixed equity indexed annuities. Investors look to annuities even more in volatile markets and for good reason. If you had purchased a fixed annuity in 1998 from American Equity for $100,000; the 2010 value would have been over $160,000. In comparison, the same investment in an S&P fund would have been worth just under $109,000.
These guaranteed interest rates make annuities very popular, especially as 401k annuities purchased with some of a retiree’s 401k plan. Waugaman answered questions about everything from annuity basics to the inner workings of American Equity. When asked how American Equity makes money from annuities, she says that it is similar to a bank loaning your money to other people while paying you interest. She says that they are growing faster than other annuity companies because of their excellent customer service to both agents and investors. After being asked about interest rates, she was honest and said that they are frighteningly low. She is hopeful that they will gradually increase so that they can offer higher immediate annuity rates and America can come out of the financial crisis. American Equity has hired 80 people over the last six months and they have been in every area of the business. American Equity is poised to retain their high position in the fixed equity indexed annuities market.