Annuity FYI Visitor Blog

Jackson National Life Insurance Company had record sales and net income in 2009, according to Business Wire press release “Jackson(R) Announces Record Sales and Record Profit in 2009.”  With sales and deposits of $15.2 billion, Jackson saw an 8% increase from 2008.  Their net income of $670 million was a complete turnaround from a $1 billion loss in 2008.  Although the financial market was still a challenging one, Jackson recorded their highest sales and net income in the history of the company.  Variable annuities accounted for $10 billion of their 2009 sales, an increase of $3.5 billion from the previous year.  Jackson’s fixed index annuities sold $2.2 billion, which was an increase of more than 100% from 2008.  While traditional deferred fixed annuity sales decreased from 2008, they still accounted for $1.6 billion in sales.

Ratings from all four financial strength rating companies have remained strong over the past seven years.  A.M. Best rates Jackson an A+(superior), Standard & Poor’s and Fitch Ratings both rate them an AA(very strong), and Moody’s Investor Services Inc. gives Jackson an A1(good) rating.  These strong ratings are earned in part by Jackson’s top annuity sales rankings in 2009.  They had 5.9% of the market share in total annuity sales which put them in 4th place.  They were also 4th in new sales of variable annuities, giving them a market share of 8.1%.  A market share of 7.5% in sales of fixed index annuities gave Jackson their third 4th place ranking.  While they dropped in ranking for fixed annuity sales from 2008, it was a planned move to preserve the company’s capital.

From a press release on Reuters, “A.M. Best Affirms Ratings of Symetra Financial Corporation and Its Subsidiaries.”  Symetra Life Insurance Company out of Bellevue, WA and its subsidiary, First Symetra National Life Insurance Company of New York, received a financial strength rating of A (excellent) and issuer credit ratings of a+ from A.M. Best Company.  All of the ratings issued for Symetra are considered to be stable going forward.

The company’s liquidity is solid as is their risk-adjusted capital position.  All four of Symetra’s business segments maintain consistent operating profitability and they continue to grow despite difficult economic conditions.  These reasons along with the fact that Symetra carries significantly less asset risk on its balance sheet than peers with similar financial ratings, helped to determine their A.M. Best rating.

Symetra is challenged to maintain its strong financial ratings despite a short list of factors that could throw them off track.  Current economic conditions, a heavy concentration in product lines that are spread-based or otherwise commoditized, a large number of immediate annuities and structured settlements that expose them to reinvestment risk, and some other risks are being watched closely.  Since 90% of Symetra’s product sales in the first half of 2009 were from fixed annuities, they are closely managing the asset and liability duration match that has improved their cash flow in the past to keep their excellent rating.

It is crucial to choose insurance companies wisely when purchasing annuities.  Your annuity is only as sound as the insurance company that is backing it up.  Sometimes it can be beneficial to split your money into annuities at different insurance companies for even more security.  Kathy Kristoff of the LA Times further explained in “Check out what’s backing your life insurance policy”.

Variable annuities are usually managed by separate investment companies, so in the event of an insurance company failure, your investment would be returned to you.  With fixed annuities, guarantees come on a state level.  All state funds are different, but $100,000 of a fixed annuity’s current value is often covered.

You shouldn’t have to worry about any of that if you choose a sound insurance company though.  An expert can help you with this choice; you can also do some research on your own.  A.M. Best, Moody’s, and Standard & Poor’s are companies that issue ratings to all insurance companies.  The better the ratings, the better the insurance company.  There are also many websites that list the ratings, including this one.

Fidelity Investment Life Insurance Company and its subsidiary, Empire Fidelity Investments Life Insurance Company have maintained their A+ financial strength rating with A.M. Best.  This information is from a press release by A.M. Best.  The superior strength rating and good issuer credit ratings are great news and mean that the company has continued earnings growth over the past five years, through a tumultuous market.

This is how A.M. Best says that Fidelity held strong in the industry:  “strong risk-adjusted capitalization, generally positive statutory and GAAP earnings, its focus on high credit quality and liquidity within its investment portfolio, prudent enterprise risk management practices and the competitive advantages it is afforded in marketing its life insurance and variable annuity products through the name recognition and branding of Fidelity Investments.”  Some moderate investment approaches helped Fidelity do better than its peers selling similar products.

Jackson National Life Insurance Company has fixed annuities to thank for it’s increasing sales in the first quarter of 2009.  While sales of their variable annuities were down compared to last year, sales of traditional fixed annuities almost doubled from the same period last year.  And their fixed index annuity sales increased by 83% from first quarter 2008 to first quarter 2009.

Financial strength ratings for Jackson have ranged from good (Moody’s) to superior (A.M. Best) and have been solid for six years.  According to President and CEO Clark Manning, “Jackson’s prudent approach to product pricing and risk management is a significant competitive advantage in the current market environment.”  They could be worth checking out for those seeking new financial opportunities.