Lincoln National Corp. has seen strong variable annuity sales this year. After the first three quarters of the year, they had more than $10 billion in variable annuity sales. That is the highest volume they have seen in the past six years. This information comes from Bloomberg’s Zachary Tracer in his article, “Lincoln Annuity Sales Top $10 Billion as Insurers Back Away.” It’s possible that one of the reasons for Lincoln National’s surging variable annuity sales is that some insurance companies have exited the variable annuity market altogether. Regardless of the reasons, the 48% increase they saw in variable annuity sales put them in the second highest spot. LIMRA sales results show that Lincoln’s sales went from $7.26 billion last year to $10.8 billion this year. Jackson National Life was the top seller of variable annuities with $15.5 billion.
Variable annuities allow consumers to have some of their money susceptible to increases in the markets. Some products guarantee that your assets will appreciate in value, others provide steady income streams in retirement. In order to protect themselves, Lincoln transferred some of their risk to Wells Fargo recently. They transferred half of the risk of their variable annuity guarantees in order to lower their risk from long-term guarantees. The senior vice president of Lincoln National’s annuity unit says that this is a great time for selling variable annuities, especially when you are considering their returns.
During the financial crisis, falling stock prices increased the liabilities of insurance companies and caused many of them to scale back on selling variable annuities. The largest life insurer in the U.S., MetLife, sold 37% less in variable annuities this year than during the first three quarters of last year. That was an intentional decrease in variable annuity sales. Prudential Financial, the second largest insurer, has seen a 44% decrease in variable annuity sales as they try to manage the risk from the products’ guarantees by investing elsewhere. Hartford Financial Services Group no longer sells variable annuities and other companies have sold off their variable annuity business or stopped selling new products.
But those who remain loyal to variable annuities are doing well with the products and will likely continue to sell them into the future. Insurance companies have seen increased profitability with their variable annuity products because of increasing stock prices. Lincoln National also saw a large increase in their New York trading value. Although many companies took a big hit with variable annuities during the tumultuous markets in 2008 and beyond, those insurers who stuck with selling variable annuities are seeing increasing sales and return on equity. If you think that the security of a variable annuity might be right for you, an expert at Annuity FYI would be happy to help you consider these investments.
Written by Rachel Summit