Pacific Life swims against the tide in the indexed annuity market
March 12, 2018 by Greg Iacurci
Pacific Life Insurance Co. is an outlier among the scores of companies selling indexed annuities.
Of the roughly 60 companies that manufacture these annuities, Pacific Life is unique in that it guarantees the maximum interest rate on its products during the contract term. Other insurers reserve the right to — and often do — lower these rates periodically based on market conditions.
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Article excerpts:
In the 13 years I’ve owned my business, Pacific Life is the only insurance company that has guaranteed the caps on their indexed annuities over the life of the contract,” said Sheryl Moore, president and CEO of Moore Market Intelligence, a consulting firm.
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Indexed annuity sales have increased dramatically since the financial crisis, more than doubling over the past decade to just shy of $60 billion. Pacific Life was the 15th largest seller of these products last year through the third quarter, at $942 million, according to market research firm Wink Inc.
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Data from Wink Inc. shows that Pacific Life’s average guaranteed rates are actually often higher or roughly equal to those of comparable products in the broader industry. Take the Pacific Index Foundation 10 annuity, for example. It currently has an average 5% cap compared with an industry average 3.94%, according to a Wink Inc. analysis. (Wink reviewed S&P 500-linked products crediting interest based on an annual point-to-point method and with the same 10-year surrender period.)
Conversely, the Pacific Index Choice 6 currently has an average 4.9% cap, lower than the 5% average for the broader industry.
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Wink’s Note: InvestmentNews’ article is about products that guarantee all of their caps for the surrender charge period.
