Indexed annuities had record sales in 2013
April 24, 2014 by Victor Epstein
The indexed annuities industry benefited from surging stock markets in 2013, which helped boost its annual sales to a new record for the fifth consecutive year.
The industry, which has a heavy presence in the Des Moines area, reported that its annual sales rose 13.4 percent from the prior year to $38.7 billion, according to the Wink’s Sales & Market Report. Fourth-quarter sales, which occurred from Oct. 1 to Dec. 31, increased 35 percent to $11.5 billion, compared with the same period of 2012.
Two West Des Moines-based insurers finished among the top five for 2013 in index annuity sales and market share.
American Equity increased its annual sales 12.1 percent in 2013 to $4.02 billion. It rankedNo. 3 nationally with an annual market share of 10.4 percent, according to Wink.
Athene USA saw its sales fall 34.6 percent to $2.74 billion in the fourth quarter as it continued to digest the $2.6 billion purchase of Aviva USA that it closed in October. Athene ranked fifth nationally with a market share of 7.1 percent.
Annuities are popular with retirees because they feature a steady stream of income after a period of initial investment. The returns of indexed annuities are tied to the performance of specific stock indices, such as the Standard & Poor’s 500, which rose 9.92 percent during the fourth quarter of last year and gained 29.6 percent in all of 2013.
“More attractive rates on these products are increasing sales,” said Sheryl J. Moore, president of the Pleasant Hill-based Wink insurance research firm. “Indexed annuities continue to gain more acceptance in bank and wire-house distributions, as rates on traditional fixed money instruments remain low.”
Fidelity & Guaranty Life Insurance, which moved its headquarters to Des Moines in January, also grew its indexed annuity sales. F&G’s fourth quarter sales were up 28 percent to $315.4 million on a year-over-year basis. Those gains helped offset a 32 percent drop in its sales for the full year, when they declined to $1.06 billion, Wink said.
The Des Moines-area insurance hub employs about 24,100 people — about one in every 24 residents. It accounts for roughly a fifth of the city’s gross domestic product.
Other insurers on the Wink list with significant local operations include Sammons, FBL, Nationwide, Principal Financial Group, ING and EquiTrust.
Sammons’ North American and Midland National brands both posted big fourth-quarter gains. North American’s sales rose 42 percent to $255.8 million, and Midland National reported a 47 percent jump to $509 million.
FBL saw sales of its Farm Bureau Life indexed annuities surge 762 percent in the fourth quarter to $19.6 million. The West Des Moines-based insurer has refocused some of its growth expectations on Farm Bureau Life since selling its EquiTrust annuity business to the Guggenheim Partners private equity firm for $471 million in 2012.
Guggenheim moved EquiTrust’s headquarters to Chicago in January, but it still has an office in the Des Moines area.
Principal Financial Group’s indexed annuity brand, which goes by “Principal Life,” reported that its fourth-quarter sales rose 61.5 percent to $16.3 million from the same period a year earlier.
Nationwide Mutual Insurance Co. saw indexed annuity sales by its fast-growing Nationwide brand rise 194 percent to $31.5 million. The Columbus, Ohio-based insurer employs about 5,000 people in the Des Moines area at its Allied Insurance and Nationwide Agribusiness subsidiaries.
ING reported a 35 percent increase in its fourth quarter sales of indexed annuities to $373.3 million. It ranked 10th in the U.S. with 3.23 percent of the market.
ING’s U.S. operations became a stand-alone business last year via an initial public offering. Its name was changed to Voya Financial, but it continues to market indexed annuities under the ING brand, according to Wink.
Indexed annuity sales rankings
Top five sellers in the fourth quarter of 2013 (percentage reflects growth from fourth quarter 2012):
1. Allianz, $2.31 billion, up 87 percent
2. Security Benefit, $1.21 billion, up 17 percent
3. GAFRI, $1.08 billion, up 182 percent
4. American Equity, $1.04 billion, up 2 percent
5. Athene USA, $673.68 million, down 15 percent
Sellers with a significant local presence:
6. Midland National, $509 million, up 47 percent
8. EquiTrust, $460.56 million, down 3 percent
10. ING, $373.25 million, up 35 percent
12. Fidelity & Guaranty, $315.39 million, up 28 percent
13. North American, $255.8 million, up 42 percent
28. Nationwide, $31.47 million, up 194 percent
32. Farm Bureau Life, $19.55 million, up 762 percent
33. Principal Life, $16.26 million, up 62 percent
Source: Wink’s Sales & Market Report
