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Variable Annuity Top Sellers Realigned, Products Have More Limits

There were many changes in the variable annuity marketplace last year.  Some of the top carriers fell down the sales chart, making room for other carriers to step up.  According to Cyril Tuohy’s Insurance News Net article “VA Market Sees Reshuffling In 2013“, the changes did not only occur on the sales leader board.  In the variable annuity sellers top 5 list, only the number 1 carrier remained the same.  Jackson National Life sold the most variable annuities in 2013.  The next four spots were taken up by insurers who each moved up two spots over the course of the year.  TIAA-CREF, Lincoln Financial Group, SunAmerica/VALIC and AXA made up the remaining four spots in the top 5.  Prudential dropped from number 2 to number 6 from 2012 to 2013, while MetLife dropped from number 3 to number 8.

All of the cuts made to variable annuity products at Prudential and MetLife paved the way for new insurers to sell more variable annuities.  The development of new products slowed down significantly in the fourth quarter of 2013.  In comparison with the 101 new product changes in the fourth quarter of 2012, there were 61 variable annuity product changes in the fourth quarter last year.  That was also down from 84 changes in the third quarter.  One annuity expert anticipates a slew of changes during the May 1 filing season this year.  Variable annuity sales last year were $141.2 billion.  This was a decrease of 1.5% from 2012, but not unexpected because of the insurers who left the market or scaled back significantly.  Carriers have been working to reduces their variable annuity exposures, but still have a lot tied up in the markets.

A few of the biggest changes in the industry came from AXA and Great West Life & Annuity last year.  AXA made changes to their Investment Edge variable annuity.  They offer 124 subaccounts with fees ranging from 1.20-1.25%.  Great West’s Smart Track II annuity has 67 subaccounts and a 1% fee.  The difference between the Smart Track I and II is that the II offers what they refer to as a uniquely structured lifetime withdrawal benefit.  Many companies have been increasing surrender charges, mortality expenses and the charge for guaranteed living withdrawal benefits.  They are just trying to limit their market exposure to avoid the losses that many variable annuity carriers felt during the market downswings at the end of the last decade.  The Hartford has made some of the strictest limits on its variable annuity holders.  Added limits definitely were the top story to end 2013, but this year we are already seeing more variable annuities offered.  Even with changes in the variable annuity industry, it remains strong and the products being offered are a great way to finance retirement.

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