Equity-Indexed Annuities Sales Drop 4% in 1Q
May 18, 2010 by Fran Lysiak
May 18, 2010
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May 17, 2010 Monday 02:39 PM EST
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US Sales of Equity-Indexed Annuities Drop 4% in First Quarter
Fran Lysiak
PLEASANT HILL, Iowa
Total sales of equity-indexed annuities in the United States dropped to $6.8 billion in the first quarter of 2010, a decline of 4% from the same period a year ago, according to Annuityspecs.com, a firm that tracks the data.
The market is coming off a record-setting year, as two of the biggest sales quarters were in 2009, Sheryl J. Moore, president and chief executive officer of Annuityspecs.com, told BestWire. Also, it doesn’t help “that rates have been very depressed on all annuities for some time.”
Allianz Life Insurance Company of North America, a unit of Germany’s Allianz SE, remained No. 1 in the first quarter, with sales of $1.4 billion and a 20.8% market share, according to Annuityspecs.com.
Aviva USA, a unit of U.K.-based Aviva plc, took second place with sales of $1.1 billion and a 16.3% market share; ranking third was American Equity Investment Life, with sales of $777.8 million and an 11.4% market share and Jackson National Life Insurance, a unit of U.K.-based Prudential plc, with sales of $472.5 million and a 6.9% market share, took the No. 4 spot.
Rounding out the top five was ING USA Annuity and Life Insurance Co., a unit of ING Groep N.V. of the Netherlands, with sales of $453.3 million and a 6.6% market share.
A drop in last year’s fourth quarter represented the first year-over-year quarterly decline in sales of these retirement-savings and income products since the third quarter of 2007, when sales fell 2% (BestWire, March 1, 2010).
Pending legislation, the Indexed Annuities and Insurance Products Classification Act of 2009, or HR 2733 and S 1789, would “effectively undo” the U.S. Securities and Exchange Commission rule reclassifying indexed annuities — which are regulated at the state level as insurance — as securities, Moore said.
Under Rule 151A, indexed annuities would be treated as securities if amounts payable by the insurer are more likely to surpass amounts guaranteed under the contract. Insurers would be required to file their products with the SEC and offer them via a prospectus. Agents would need to become registered representatives, meaning licensed to sell securities.
Sen. Thomas Harkin, D-Iowa, also offered an amendment to S 3217, the Restoring Financial Stability Act, which would give states and territories sole authority to regulate indexed annuities, Moore said. “The insurance industry hopes to have a final determination on the securities status of indexed annuities within a short time frame” through one of these measures, she said.
In December, the SEC told a federal appeals court it would delay the effective date of its proposed rule, known as 151A (BestWire, Dec. 10, 2009).
Although indexed annuities are scheduled to be regulated as securities starting Jan. 12, 2011, the SEC must prove that securities regulation of these products would improve competition, capital formation, and efficiency in the market, Moore said.
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)
May 18, 2010
