Wink CEO: US Sales of Indexed Annuities Gaining Traction in Banks
November 24, 2013 by Fran Lysiak
Best’s News Service – November 21, 2013 10:52 AM
PLEASANT HILL, Iowa – Total third-quarter 2013 sales of indexed annuities in the United States increased to $10 billion, up 15% from the same period a year ago, according to Wink Inc.
Sheryl J. Moore, president and chief executive officer of Moore Market Intelligence and Wink, told Best’s News Service the third quarter represented another record for sales. Sales are up mostly on an improving interest rate environment, she said.
With indexed annuities, a type of fixed annuity, the insurer invests most of the customer’s principal in bonds to ensure the policy will generate a small annual return but uses a small portion of the premium to buy options in a stock market index, usually the S&P 500. Options that are exercised can result in additional interest credited to a policy, potentially more than an investor might achieve through other fixed-income investments.
As for companies, noteworthy changes included large sales increases for Great American, up 33.3% from the second quarter, and No.8-ranked Symetra Financial, up 44.6%, Moore said.
Both companies “made inroads” in sales in banks, which historically have not embraced indexed annuities, Moore said. Now that banks don’t have to deal with uncertainty regarding the regulatory status of indexed annuities as a result of the U.S. Securities and Exchange Commission’s former Rule 151-A, banks “are seeing the products in a new light.”
Low interest rates on bank certificates of deposit also helped to increase the value of indexed annuities in banks, Moore said.
Separately, LIMRA said most of the increase in sales of indexed annuities over the second quarter came from accumulation-type products. “We are seeing broader acceptance of indexed annuities across the different distribution channels,” Joseph Montminy, assistant vice president, LIMRA Secure Retirement Institute annuity research, said in a statement. Bank sales expanded from 9% market share one year ago to 15% market share this quarter while independent broker-dealer market share grew from 3% to 5 % year over year, he said.
Allianz Life Insurance Company of North America, a unit of Germany’s Allianz SE, continued as the No. 1 company in sales, with third-quarter sales of about $1.3 billion and a 12.9% market share, according to Wink.
Again capturing second place was Security Benefit Life, a company of private equity firm Guggenheim, with sales of $1.25 billion. Maintaining its third-ranked position was American Equity Investment Life, a unit of American Equity Investment Life Holding Co., with sales of $1 billion. Remaining in fourth place was Great American Financial Resources, a member of GAFRI Group, with sales of $879.8 million.
Climbing a notch to return to fifth place was Aviva USA, with sales of $518.2 million. The company, which ranked fourth in the first quarter of this year, dropped out of the top five in the second quarter to rank sixth.
In early October, private equity-backed Athene Holding Ltd. completed its acquisition of Aviva USA Corp. for about $1.55 billion. Aviva USA is now known as Athene USA, the parent of Athene’s U.S. operations, headquartered in West Des Moines, Iowa. The deal included Aviva Life and Annuity Co. and Aviva Life and Annuity Company of New York. The Bermuda-based Athene Holding is owned by several institutional investors, with its largest shareholder being AP Alternative Assets, which is managed by Apollo Global Management, another private equity firm.
Private equity firms are increasingly tapping into what they view as a potentially lucrative financial opportunity in fixed annuities, including indexed, in the United States.
There also were several “fire sales” being offered during the third quarter, according to Moore, who noted that just four companies out of the top 15 saw sales decline, compared with the previous quarter.
In October, Athene also completed the sale of Aviva USA’s life insurance business to Presidential Life Insurance Co. USA, a unit of Commonwealth Annuity and Life Insurance Co. which is part of Bermuda-based Global Atlantic Financial Group, a multiline insurance and reinsurance holding company.
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)
BN-NJ-11-11/21/2013-2013 1052 ET #
