Annuity FYI Blog

Allianz Life Insurance Company has a new senior vice president and national sales manager, according to press release “Allianz Life Promotes Bob Densmore to SVP – National Sales Manager.”  Bob Densmore will be in charge of their annuity sales strategy in the bank, regional, independent, and wire broker/dealer distribution channels.  Allianz has been happy with his leadership skills as well as his revenue generating abilities.  They promoted him to capitalize on the popularity of annuity products, focusing on the channels consumers want to buy them through and the specific guarantees for which they are looking.

His nearly twenty years of experience in the financial industry began with Thrivent Financial.  Densmore started working for Jackson National in 1996 and was in charge of the wholesaling for fixed and fixed indexed annuities.  He was a regional vice president for Jackson, where he raised their variable annuity premiums to two billion dollars.  As one of the top producers at Jackson, he worked to develop new variable annuities, living benefits, and other marketing campaigns.  He started working for Allianz Life in 2008 and hopes to increase the success of their annuity business.

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.

In “Comparing & Contrasting Variable Annuity Riders,” Russell Bailyn of I Stock Anyalyst highlights the riders associated with current variable annuities being offered.  Some of the top companies offering variable annuities last year were MetLife, Prudential, and Jackson National so the author discusses some of their products as well.  Basically a variable annuity allows you to grow savings for the future while deferring taxes until you actually use the money.  The premium you have paid an insurance company is divided among different investments, so the value of your contract will fluctuate with those investments.  Once you withdraw the money, it is taxed as ordinary income.  Variable annuities are registered with the SEC because they are considered securities.

Variable annuities usually guarantee you a return of premium, so that while you could get (and hope to) more than you put in, you at least won’t receive less in the future.  Most variable annuities also offer death benefits, so that if you die before receiving your premium back the money will go to a beneficiary.  The guaranteed lifetime income riders guarantee a different amount based on the age that investors start receiving their payments.  The author points out that most companies and variable annuities offer about the same income amount based on the riders you choose and that their marketing efforts are what differentiates them.

Prudential offers the HD Lifetime 6 Plus, which takes 6% of the highest daily value of the variable annuity to guarantee income.  They offer a daily lock whereas some other companies offer monthly or quarterly locks in value.  The Guaranteed Minimum Income Benefit Plus from MetLife compounds 5% of the income base until you are 80.  It is different than some other variable annuities because there is a point where you have to annuitize and receive an income stream.  Jackson National offers the Perspective II giving 6% interest for 10 years in each year that you leave the money in your annuity.  They have a lot of other investment options that are less restrictive than some other insurance companies as well.  Those are just a few of the many variable annuities in the market to choose from.  While the basics of the product are fairly standard, the difference lies in what type of living benefit rider goes along with the variable annuity.

Jackson National Life Insurance Co. emerged from the financial crisis in a relatively strong position, according to new president and CEO Mike Wells.  He will take over the role from Clark Manning on January 1 of next year, as stated in “New Jackson National CEO: Company Well Positioned Following Financial Crisis” published on Trading Markets. Jackson is a subsidiary of Prudential plc out of London and believes they are in a stronger position now than many of their competitors.

They are one of the top sellers of fixed, variable and fixed indexed annuities.  With $670 million in net income last year, they made a complete turnaround from their billion dollar loss in 2008.  Interest rate derivatives and variable annuity hedging helped Jackson’s great sales for last year and they currently have the fourth highest variable annuity sales in the U.S. this year with $6.8 billion.  Last year they set a record with their sales and deposits of $15.2 billion.

Jackson uses independent agents working through wholesalers to sell their products.  They back them up with excellent customer service, strong risk management, and a dedication to making technological advancements related to information and communication.  The new president and CEO has been with Jackson since 1995 and helped to develop some of their first annuities in the variable and fixed indexed form.  He plans to maintain their strong financial strength ratings and keep Jackson in their great position in the industry.

The list of the top variable annuities sold in bank channels this year was just compiled.  The Bank Investment Consultant article “The Most Wanted List (of Variable Annuities,” by Kerry Pechter, talks about the most popular variable annuities of the year thus far.  It’s well known among financial consultants and advisors that variable annuities do not sell themselves; the benefits need to be sold to investors.  The benefits of protection from a down market and potential for upside market gains are what many investors are looking for today.  Variable annuity sales in the bank channel increased in the first quarter of this year, while sales in many other channels actually declined.

Jackson’s National Perspective II was the top seller.  Jackson appeals to investors and advisors looking for more flexibility and a lot of options as opposed to a low cost.  Their GLWB option, called the Joint Lifetime Freedom 6, offers increases in the guaranteed benefit base.  Prudential’s Advisor Plan III and APEX II have been replaced by a new, similar product but still account for the second highest bank annuity sales.  Their aggressive marketing and their “Highest Daily 6 Plus” living benefit, along with fees in line with other annuity products on the market have helped maintain Prudential’s variable annuity success.

The third best selling of the bank channel variable annuities is Nationwide Bank of America’s Future Venue.  The product offers L.inc, a popular and affordable lifetime income rider.  Pacific Life’s Voyages is the least expensive and most conservative on this list.  When you compare annuities with these options, conservative investors tend to be satisfied with Pacific Life’s CoreProtect Advantage lifetime income option and their other riders without rollups.  Variable annuities with GLWBs and rollups are great investments in today’s economic climate.  It’s important for advisors to speak with their clients about the products since clients rarely research variable annuities on their own.