Prudential Financial has announced that they will no longer sell variable annuities with guaranteed living benefits in response to the uncertain economic climate and historic low interest rates. This includes the company’s Highest Daily Income and Prudential Defined Income annuity products, according to chairman and CEO Charlie Lowrey.
“In terms of changing the focus within the business, we’re on a path to de-risking, and have made major pivots to less interest-rate sensitive and more capitalized solutions in our individual annuities and in our life business,” Lowrey stated in a recent InsuranceNewsNet article.
“Specifically, you’ve seen us pivot away from VAs with lifetime income guarantees to less market-sensitive products,” Lowrey added. “At the same time, you’ve seen us, in our life business, pivot to simpler, non-guaranteed products.”
In May of this year, the insurer introduced its FlexGuard annuity which Lowrey says they are committed to. FlexGuard is Prudential’s first indexed variable annuity product, and it was designed to provide customers with downside protection. Consumers will also have the opportunity to grow and accelerate the performance of their retirement assets with FlexGuard.
“Following an accelerated launch to market in the second quarter FlexGuard continues to gain momentum, accounting for 38% of our annuity sales in quarter,” Lowrey stated.
As Prudential makes adjustments to its offerings, the company has reported a strong third quarter. Annuity sales were slightly up from the second quarter but nowhere near third quarter sales from the previous year.
Prudential is also making adjustments to its life insurance business as they reprice products to mitigate the impact of low rates.
“As a result of these actions, we expect individual annuities and individual life sales to continue to move lower in the near term,” said Vice Chairman Rob Falzon.
Written by Rachel Summit