A lot of the players in the variable annuity game have scaled back their business. This leaves opportunity for those insurers who are still interested in selling variable annuity products. Jackson National Life is one of the companies who is taking advantage of this variable annuity exit by other insurers. In the Bloomberg News article “Jackson National Takes Big Lead On Variable Annuities As Rivals Scale Back” posted by Financial Advisor Magazine, it says that Jackson National is still leading in U.S. variable annuity sales. They are a part of Prudential Plc, which is the UK’s largest insurance company by market value.
LIMRA’s Secure Retirement Institute just released sales figures from the first six months of 2014. Jackson National Life’s variable annuity sales for the first half of 2014 increased by 24% from the same time last year, to $12.7 billion. The total industry sales of variable annuities were $70.4 billion, a decrease of 4%. Annuity sales in the UK have been declining this year because of government incentive changes, so Prudential is banking on growth in the U.S. market as well as in Asia to help their profits. Their Elite Access variable annuity is the bread and butter of Jackson National’s variable annuity business because of its multitude of options. Since being introduced in 2012, Elite Access has performed great for Jackson and they are confident that it will continue into the future. This increase in annuity sales and higher assets under management led Jackson’s pretax operating income to increase by 20% in the first half of this year.
MetLife was the top seller of variable annuities back in 2011, but has since scaled way back to reduce the company’s market risk. Prudential Financial held the top spot in 2012 while Jackson National sold the most variable annuities in 2013. Lincoln National had the second highest variable annuity sales of $6.42 billion in the first half of 2014, despite their 11% decrease in sales. Third place was taken by TIAA-CREF with $6.38 billion in sales in the first half of this year. AIG’s variable annuity sales increased 12% to $6.17 billion, which earned them the 4th highest sales. Prudential Financial held the 5th spot with $4.95 billion. MetLife’s sales were almost halved from $6.26 to $3.21 billion, landing them in the 8th spot. The top three sellers of fixed annuity products were Allianz SE, New York Life and AIG.
Variable annuities are used for their tax deferral and sometimes for a guaranteed stream of income. Jackson National and Lincoln Financial are leading the way for companies to offer more variable annuities without these living benefits though. The guaranteed minimum returns hurt a lot of insurers during the financial crisis, which is why so many companies scaled back on variable annuities. Other companies have placed restrictions on the investments in their variable annuities, forcing a mix of stocks and bonds or changing investments based on the markets. Since Jackson National has not placed these kinds of restrictions on their variable annuities, they remain popular with clients and investment oriented advisors. If the sales results from the first half of this year are any indication of the second half sales, it looks like Jackson National Life will take the top spot in variable annuity sales for the second year in a row.