Annuity FYI Visitor Blog

In “AIG Learns It’s All in the Name” from FinancialPlanning.com, we learn that taxpayers’ bailout dollars have helped AIG bounce back faster than many expected.  American International Group is one of the few insurance companies that has successfully come back from the financial mess it was in through creative branding.  It’s subsidiary was previously named AIG Annuity Insurance Co. but was switched this year to Western National Life Insurance Co.  That distancing from the tarnished brand name of AIG helped lead Western National to be the third quarter’s number one seller of fixed annuities through banks.  New York Life Insurance Co. does still hold the number one spot for the year, but believes it lost it’s third quarter spot due to low interest rates in the market.

Western National has been able to attract more annuity clients because they are offering higher interest rates than competitors.  They do this by making agreements with banks to lower the commissions they pay to the banks.  In turn, the banks receive more annuity clients after a couple years of clients shying away from the products.  Banks believe that the volume of fixed annuity customers they receive will make up for the lower commissions they are being paid by Western National.  While some other insurance companies may not think it is fair that AIG’s Western National is using government bailout money to cushion it’s higher interest rate offerings, that was part of the purpose for the bailout.  Companies should use that money in a way that they will become successful again and repay the bailout money to taxpayers.

According to “New York Life revamps sales team” by Jessica Toonkel Marquez of Investment News, New York Life Insurance Co. has added specialists and reorganized its management team to help wholesalers.  They want to make it simpler for the wholesalers to sell the best annuities, mutual funds and other guaranteed-income products to financial advisers.  Each of the product categories has new specialists supporting the sales teams.  New York Life has also made the switch to have their relationship management teams organized by client instead of product.

Having only one person as a company contact throughout the “entire product solution suite” will make the process easier for wholesalers and their advisers.  It avoids sales representatives in the same company competing for clients as well.  Annuity research company Annuity Insight says that New York Life is a top player in the annuity marketplace and they see them excelling into the future.  The addition of a new position as the head of business development for retirement income security products was given to Tom Johnson, formerly an executive at Mass Mutual.

In order to attract more advisers, New York Life Insurance Co. is changing their immediate annuities by introducing a no-load version.  This information comes from Investment News‘ “Take a load off: New York Life set to tweak immediate annuities to draw advisers” by Jessica Toonkel Marquez.  This no-load immediate annuity is geared towards fee-based advisers because it is believed that this product will be more widely accepted.

New York Life’s Vice President Matthew Grove stressed the company’s strong belief in annuities that offer lifetime income while he was at Money Management International’s fall conference.  He also said that the no-load immediate annuity should be available early next year.  Currently New York Life only offers immediate annuities in a load-version.  They plan to make this no-load version easily understandable for advisers so that they are willing to and excited about selling the best annuities to their clients.

Deferred fixed annuity sales grew by close to 60% last year, according to an article by Janet Kidd Stewart in the Chicago Tribune.  It’s really no surprise as life expectancies continue to rise and many people’s life savings dwindle.  Northwestern Mutual Life Insurance Company actually has a calculator on their website to estimate your life expectancy, which can help determine how long you need to finance.  A one-time lump sum investment is paid out monthly starting at a date in the future with deferred fixed annuities.

Here are two examples of the updates being made.  The Hartford Life Insurance Company updated their Income Annuity last year by adding the ability to both choose the date payments begin and some option to change that date.  New York Life Insurance company added “The Changing Needs Option” rider onto its immediate annuity product.  This rider gives investors the option to add to their initial payment by up to 5 times if they need to in the future.  They can also decrease the amount by half; both do have a fee attached.  These updates are meant to help ensure that you do not outlive your finances.

According to a press release by Beacon Research, fixed annuity sales estimates in the U.S. for the first quarter of this year were $34.9 billion.  The Fixed Annuity Premium Study comprised of data from 53 insurance companies, which account for about 86% of this market.  This sales number was not only the highest since 2003 when the study was first completed, but was also 78% higher than the same quarter last year.

The four types of annuities assessed ranked in sales high to low starting with book value annuities, indexed, market-value adjusted, and immediate.  All 4 showed increases from last year’s 1st quarter, while only book value annuities increased from the prior quarter.

The top ten sales leaders were MetLife, New York Life, Aviva USA, RiverSource Life, AEGON/Transamerica Companies, AIG, Allianz Life, Jackson National Life, Principal Financial Group, and USAA Life.  You can check out more of the study information in Beacon Research’s press release.  Contact one of our experts with any questions about fixed annuties from the top ten companies and more.