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Private Equity Firms Growing in Fixed Annuity Market

Not only has Guggenheim taken over Sun Life Financial’s variable annuity business, they are also a hot player in the indexed annuity market as well.  Their Security Benefit Life Insurance Co. has entered the list of the top 5 fixed annuity players with third quarter fixed annuity sales of $1.03 billion.  This information comes from Darla Mercado’s Investment News article “Guggenheim’s Security Benefit Life climbs among top fixed annuity players.”  Indexed annuity sales hit record high levels in the third quarter of 2012, due in large part to the contributions from private equity owned firms.  I’m excited to see the fourth quarter annuity sales numbers in the next few weeks.

In order of first through fifth, the top five fixed annuity sellers were Allianz Life, Aviva USA, New York Life, Security Benefit, and American Equity.  Although the overall fixed annuity sales were down 13% from the third quarter of last year, indexed and income annuities were very strong sellers.  The year-to-date indexed annuity sales have increased 4.5% and income annuity sales have gone up 9% this year.  A Beacon Research Publications representative says that indexed annuity sales numbers would actually be down this year without Security Benefit Life’s excellent growth.  Guaranteed lifetime withdrawal benefits are the big draw of Security Benefit Life’s product line because they have kept these guarantees very competitive.

While private equity owned companies are held accountable by their investors, the fact that they are private is an advantage in the fixed annuity market.  They have larger investment operations and don’t have to focus as much on quarterly numbers as their publicly held competitors.  These are big reasons why companies like Guggenheim and Apollo Global Management are becoming larger players in the annuity space.  Last year, private equity firms accounted for 2.8% of the fixed annuity market share.  This year, the companies owned by these firms accounted for 9% of the market share.  When you look specifically at indexed annuities, the private equity owned insurers went from 5% of the market share last year to 15.4% this year.  Guggenheim’s presence is a big part of this growth.

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