MetLife Deal Signals Hard Times Coming for Variable Annuity Sales
April 1, 2016 by Cyril Tuohy
MetLife’s decision to sell its career agency insurance channel and broker-dealer to mass-Mutual Financial Group may signal that contraction of the annuity market that some analysts predicted would come from the Department of Labor’s new fiduciary rule.
The controversial rule changes “the landscape when it comes to commission-based sales for variable annuities, mutual funds and real estate investment trusts (REIT),: said John McCarthy, senior product manager for Morningstar in Chicago. Click HERE to view full story on page 40
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Fixed Index Annuities to Benefit
In contrast to fixed annuities with nearly 70% being sold through captive distributors in 2014, nearly 80% of fixed index annuities (FIAs) were sold through the independent channel that year. FIAs have quickly become the industry’s new “it” product that protects investors from loss bu allows them to participate in the market gains.
Any new FIA backed by the strength of MetLife and distributed by a blue-chip company like Mass Mutual can only be good for buyers and an annuity market segment in the midst of a boom, according to Sheryl J. Moore, president and CEO of Moore Market Intelligence, a market-leading annuity research company.
[Wink’s Sales & Market Report shows] 2014 indexed annuity sales reached $46.8 billion, an increase of 21.3% from 2013.
More companies selling FIAs means more choices, and that appeals to agents and consumers, Moore said. As part of the deal, MetLife will also develop an FIA for MassMutual to distribute exclusively.
Since MassMutual primarily distributes its annuities through a career agency model, its agents will be selling primarily MassMutual annuities and new annuities developed by MetLife under the terms of the deal.
“Ultimately, MassMutual won’t necessarily be in competition with anyone” Moore said. “While there are other companies selling indexed annuities primarily through a career agency distributon model, MassMutual will be the larges company distribution this way.”
