Prudential pivots toward indexed annuities
January 30, 2018 by Greg Iacurci
Prudential Financial Inc. Monday announced the launch of its first indexed annuity, the latest variable-annuity carrier to pivot toward the increasingly popular annuity.
The variable annuity market has had a rough go in recent years, having seen consecutive years of sales declines from 2011-16. Official tallies for 2017 aren’t yet available, but sales will likely be down yet again — sales in the third quarter were the lowest for the product line in 20 years.
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Sheryl J.Moore excerpts from the article:
“Variable annuity sales have been impacted negatively, and you see some companies saying, ‘Indexed annuity sales keep going up, maybe that’s something I should be considering to replace some of that lost revenue,'” said Sheryl Moore, president and CEO of consulting firm Moore Market Intelligence.
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Other VA providers have entered the indexed annuity market in recent years — Ohio National Life Insurance Co. in 2016, Variable Annuity Life Insurance Co., an AIG subsidiary (2015), Thrivent Financial for Lutherans (2014), Nationwide (2014), Hartford Life and Annuity Insurance Co. (2011) and Pacific Life Insurance Co. (2011)., according to Wink Inc., a market research firm.
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Up to 2010, some variable annuity providers perceived a potential regulatory conundrum that prevented them from entering the market, Ms. Moore said.
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Further, historically low interest rates during that time period caused insurers’ fixed annuity business to decline — their payouts are tied directly to interest rates. This led to a situation in which variable annuity providers began turning to indexed products to make up for lost revenue, Ms. Moore said.
