By Maria Wood

January 5, 2012

Even as several major carriers have either left the variable annuity (VA) business or limited their exposure to the product, one company has a new variable annuity on tap.

Sammons Retirement Solutions, based in West Des Moines, Iowa, expects to release its new VA with the next 30 to 60 days, according to company president Bill Lowe. The product will be offered through broker-dealers and their advisors.

Instead of emphasizing the product’s guaranteed benefits, Sammons intends to market its new VA as a tax-deferral tool and one that it says offers buyers a more robust investment menu.

“Players are exiting the variable annuity business because of the unattractive nature of the guaranteed benefits for the insurance company,” Lowe said. “We also see that the companies are getting away from focusing on their investment lineup and tax deferral [benefits]. Instead, they are focusing almost exclusively on the guaranteed benefit space. We believe there is a large market that is going to get even larger for those folks that are looking for quality investment options in a tax-deferred vehicle.”

Lowe said there will be some 80 investment options that will include tactical funds and emerging markets. Such investment choices are difficult to hedge, he noted, which sets them apart from other VA providers.

“If you look at a lot of the companies out there, they are focused on adding investment options they can hedge because most of their sales come in with the guaranteed benefit options,” Lowe said. “We’re focused on the quality of the investment options, so we have investment options that would be very difficult to hedge.”

Lowe declined to discuss fees because the product is still in the regulatory approval stage. However, he said the VA will be “very competitive from a cost perspective.”

Lowe said now is the right time to offer this variable annuity, given its design and the regulatory climate in the country. “It really deals with the three major objections to variable annuities, which is cost, complexity and the unwillingness to tie up funds,” he said. “So we will have a no surrender charge on the product, very competitive cost, and a very simple design. The differentiating factor is the quality and the range of the investment options. We’ll have broad options from big brand-name managers and boutique managers. When you have a feeling that there is going to be a rising tax environment in the country, then I think more folks are going to seek the power of tax deferral.”

Sammons Retirement Solutions is part of Sammons Financial Group, an insurance holding company that includes Midland National Life Insurance Co. Its parent company is Sammons Enterprises, Inc. of Dallas.

Lowe was appointed president of Sammons Retirement Solutions when the business line was launched in June. He spent 17 years with ING, including a stint as CEO of its U.S. annuities business.