Annuity FYI Visitor Blog

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  Prudential’s Advisor Plan III and APEX II have been replaced by a new, similar product but still account for the second highest bank annuity sales.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.

Prudential Financial Inc. and American International Group Inc. contributed to the United States’ largest variable annuity sales increase since 2007.  According to Bloomberg’s “Variable-Annuity Sales Rise 11% as Prudential, AIG Post Gains” by Inyoung Hwang, the $35.5 billion in sales was an increase of 11% for the second quarter of this year.  Prudential sold $5.3 billion of variable annuities to capture the top spot in sales.  This was a huge increase from their $3.38 billion in sales during the second quarter of last year.  Limra International believes that the market is showing signs of recovery since most of the top 20 companies had growth in their variable annuity sales.

After AIG was helped by the federal government, they increased their variable annuity sales 45% from $1.09 billion to $1.58 billion.  AIG was able to increase their operating profit by 17% after the profit from their U.S life insurance businesses quadrupled from last year’s profits.  The second highest sales of $4.5 billion belongs to MetLife Inc., although they experienced a very small decline from the same period last year.  Annuity rates and other factors contributing to the variable annuity sales affected the top companies differently.  The third and fourth place sellers were TIAA-CREF and Jackson National Life.  The industry is hopeful that this second quarter increase will continue into the future.

Prudential Financial Inc. and Jackson National Life Insurance Company have seen a large increase in their variable annuity sales through banks.  Prudential has seen the majority of their overall growth come from new channels of distribution, rather than their past sales channels.  Their second quarter variable annuity sales were $5.31 billion, which was an increase from $3.37 billion in the first quarter of this year.  While they saw a decline in their fixed annuity sales and after-tax adjusted operating income, Prudential is very happy with the prospect of growing their variable annuity business while they work to increase the other sales.

A combination of Prudential offering some of the best variable annuity guarantees and compensating advisers well has most likely led to this recent increase.  As the markets became more volatile and interest rates fell, many companies significantly reduced their variable annuity business, allowing Prudential’s Highest Daily variable annuity to top the sellers list last year.  Prudential has even reduced some of their benefits because of the low interest rates, changing their Highest Daily Lifetime 7 to the Highest Daily Lifetime 6 last summer.  Their pricing model is evaluated frequently and can be changed a few times a year if they find that necessary.

Prudential is open to purchasing other companies in order to expand their business, but stated that they have no definite plans to do so.  Their top goals would likely be to expand business in Japan and the U.S. retirement industry.  Selling the best annuities and other products in their marketplace always remains important, so any acquisition would have to follow their model.  AIG’s Star Life Insurance Co. Ltd., AIG Edison Life Co., and ING all seem to be possibilities for purchase by Prudential.

In the PR Web press release “Annuity FYI Endorses Secondary Market Annuities, With Rates as High as 7.75%,” secondary market annuities are said to be better investments than most fixed indexed annuities.  In a market with current low interest rates, they rival traditional fixed annuities, equity linked CDs, and bonds.  The one-time investment usually ranges from around $40,000 to $500,000 and can get an interest rate around 7.75% currently.  The investor can receive their payments periodically or in a series of lump sum payments over time from established and dependable companies like John Hancock, MetLife, and Prudential.

A current $50,000 investment in a secondary market annuity from Transamerica would repay an investor $300,000 over the course of 24 years, yielding 7.75%.  There is a comparison table and access to expert help on this Annuity FYI website.  You can also sign up for weekly emails to inform you of the most recent good investments.  Many investors don’t even know what secondary market annuities are, even though they can be such a valuable investment product.  Speak with an expert via phone or internet and see if this investment works in your portfolio.

Variable annuity sales increased from the 1st quarter of 2009 to the first quarter of 2010, according to Insurance News Net’s “US Sales of Variable Annuities See First Year-Over-Year Gain in Two Years.”  With $31.4 billion in total sales, variable annuities increased 3% from the same time last year.  The first quarter of 2008 was the last time that there was such an increase in variable annuity sales.  A spokeswoman for the Insured Retirement Institute says that this marks a slow and cautious return to the stock market for investors.  The sales are from both individual and group annuities.

Eighty-percent of investors who purchased a variable annuity also included some type of living benefit guarantee.  The most popular was the guaranteed lifetime withdrawal benefit.  Purchasing a death benefit annuity was also widely popular to protect investors’ heirs.  Prudential Financial, Inc. remained the top variable annuity seller in the first quarter of 2010, after capturing the top spot for all of 2009.  The rest of the top five companies were MetLife, TIAA-CREF, Jackson National Life and Lincoln National Corp.  The consensus with variable annuities is that they are getting simpler for consumers and less risky for insurers.