Wink CEO: Increased Sales of Proprietary Products Help Boost 2Q US Sales of Indexed Annuities
August 27, 2014 by Fran Matso Lysiak
PLEASANT HILL, Iowa – Increased sales of proprietary products specifically helped to boost sales of indexed annuities in the second quarter of 2014, says the chief executive officer of Wink Inc.
Total second-quarter sales of these retirement savings and income products in the United States increased to $12.6 billion, a 36.5% gain from the same period a year ago, according to Wink, a firm that tracks the data.Sheryl J. Moore, president and CEO of Wink and Moore Market Intelligence, told Best’s News Service sales are up 15.4% as compared with last quarter, calling this “significant” when one considers the first quarter represented the “second-greatest-selling quarter ever” for indexed annuities.
She pointed out 35.3% of all sales in the second quarter were through proprietary product arrangements, or those available only to a select group of distributors.
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.
Sales of indexed annuities accounted for about 47.8% of all fixed annuity sales in the second quarter, but this wasn’t the highest ever, Moore said. But only four companies out of the top 20 had declines in sales compared with the previous year, she said.
By company, Allianz Life Insurance Company of North America, a unit of Germany’s Allianz SE, once again remained the leader, with second-quarter sales of nearly $3.8 billion and increasing its market share to 30.4%, according to Wink. Allianz has been No. 1 in sales since 2009 (Best’s News Service, May 21, 2014).
The remaining four companies in the top five also all kept their positions from the first quarter. Capturing second place was Security Benefit Life Insurance, whose parent is Guggenheim, a private equity firm, with sales of $1.25 billion and a nearly 10% market share.
Ranking third were the American Equity companies, part of American Equity Investment Life Holding Co. (NYSE: AEL), with sales of $1 billion. Coming in at No. 4 were two companies of Great American Insurance Group, with combined sales of nearly $787 million. These companies are Annuity Investors Life and Great American Life, Moore said.
Rounding out the top five was Athene USA, formerly known as Aviva USA with second-quarter sales of $613.5 million.
Private equity-backed Athene Holding Ltd., based in Bermuda, last October completed its acquisition of Aviva USA Corp. for about $1.55 billion. Athene Holding is owned by several institutional investors, with its largest shareholder being AP Alternative Assets, which is managed by Apollo Global Management, a private equity firm.
The only new entrant in the market in the quarter was Guggenheim Life & Annuity, which didn’t report any sales this quarter, Moore said.
Earlier this year, New York’s Department of Financial Services said it was proposing new regulations it said would increase policyholder protections as they apply to private equity purchases of insurers, especially life insurance annuity companies. The reforms include more transparency and a higher financial standard and are based on conditions the department required during several transactions last year in which investment firms Guggenheim, Apollo, as well as Harbinger, bought the annuity companies.
Allianz Life Insurance Company of North America currently has a Best’s Financial Strength Rating of A (Excellent). Security Benefit Life Insurance Co. currently has a Best’s Financial Strength Rating of B++ (Good).
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)
