According to NASDAQ article “Positive Outlook for MetLife Annuity Sales,” the Trefis Team says that MetLife’s new variable annuity has accounted for over a $1 billion in sales in just one year. MetLife teamed up with Fidelity Investments to offer the MetLife Growth and Guaranteed Income (MGGI) variable annuity, which is very popular among investors. MetLife offers many different annuities, insurance products and retirement plans. Their main competition comes from Prudential, AIG and Hartford.
The Trefis Team estimates MetLife’s stock price at $48.83 and they say that 17% of that can be attributed to the company’s annuity sales in the U.S. That price estimate is about 10% higher than the market price because of MetLife’s improved outlook. They had the second highest annuity sales in 2010, selling close to $21 billion. Variable annuity sales were more than $18 billion and fixed annuity sales were just over $2 million. Although MetLife saw a decline in fixed annuity sales, their variable annuity sales increased by 19%. Prudential was the only company to have higher annuity sales in 2010, with sales over $23 billion.
Fixed annuity sales saw a large decline last year partly because of the large increase they saw in 2008 and 2009 during the economic crisis. Investors were looking for less risky investments and sought the comfort of fixed annuities. As investors switched back to taking on more risk, they went back to variable annuities hoping to see large increases in their investments. Overall variable annuity sales in the market increased 11% in 2010, while fixed annuity sales decreased. The total annuity premiums for MetLife last year were $875 million, which was an increase of 40% over their total annuity sales in 2009. The Trefis Team expects continued growth in annuity sales for MetLife.