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Big Changes in Fixed Annuity Sales Leaders Indicates High Competition

Insurance News Net’s Linda Koco said that the “FA Competition (is) Shifting into High Gear” in a recent article. This is in steep contrast to the variable annuity side of the business. The LIMRA Secure Retirement Institute’s sales rankings revealed an interesting trend over the past few years. The quarterly sales rankings change the most, both up and down, when the annuity competition is stronger. Third quarter sales figures showed a lot of movement between annuity carriers for sales rankings on the fixed side of the business.

LIMRA compared sales rankings from the second and third quarter of this year and the third quarter of last year to determine significant changes. Only three of the fixed annuity carriers were in the same position in the top 20 rankings between the second and third quarters of this year. Ten carriers moved higher on the list and 7 carriers moved down. Six carriers remained in the same position when comparing the third quarters of 2014 and 2015. Five carriers moved up in rankings, five moved down, and four companies were pushed out of the top 20 rankings by carriers new to the list. Some of the changes were quite significant in value.

Variable annuity sales rankings didn’t change much when looking at the same comparison quarters. Only one carrier was different between the second and third quarters. There were 12 changes from the third quarter of last year to the third quarter of this year. Most were small moves up or down one spot with the exception of one new company joining the top 20 rankings. These types of small changes make sense in a variable annuity market that is not undergoing much excitement or innovation right now. The top 20 variable annuity sellers account for 93% of all variable annuity sales.

Although variable annuities still make up 54% of the total annuity sales, their dominance in the industry is shifting. They accounted for 72% of sales in 2007 and 67% in 2012. Variable annuity sales were down 7% in the third quarter and are down 4% year-to-date. Market volatility is one of the main reasons that variable annuity sales are down and consumers are looking towards other annuity products. These volatile markets have helped the fixed annuity market because it is seen as a safe space, according to LIMRA’s Todd Giesing. Carriers have still been able to offer competitive rates, even with unstable markets. Fixed annuity sales increased 21% quarter to quarter and are up 2% for the year. Indexed annuity products have been the driving force in the increase of fixed annuity sales. LIMRA found increased competition and innovation as two important factors driving the success of fixed indexed annuity products.

Market volatility was really the main factor leading to increased competition in the fixed annuity market in general, especially the indexed annuity branch. This volatility led to increasing innovation, high sales increases and big changes in the top 20 sales rankings. New York Life took the top sales spot away from Allianz Life, who held the top spot during the second quarter of 2015 and the third quarter of 2014. Jackson National kept their top variable annuity sales spot during all three quarters that were compared. The fact that fixed annuity sales rankings are changing so much quarter to quarter shows that competition and innovation are increasing in this segment of the annuity market.

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