Wink Inc.: First-Quarter US Sales of Indexed Annuities at Two-Year Low; Large Drops in Sales by Allianz Life, Aviva
June 11, 2013 by Fran Matso Lysiak
PLEASANT HILL, Iowa – Total first-quarter sales of indexed annuities in the United States dropped to $7.8 billion, down 2.8% from the same period in 2012, according to Wink Inc., formerly known as AnnuitySpecs.com.
Sales haven’t been this low in two years — since the first quarter of 2011, Sheryl J. Moore, president and chief executive officer of Wink, told Best’s News Service. Sales fell from the same period a year ago mostly due to the large drop in sales from Allianz Life and Aviva, she said.
From the fourth of 2012, total sales dropped even more — at 8.2%. First-quarter sales “are always down as compared to the previous quarter,” Moore said. Fourth-quarter sales are “huge, as agents make a big push in their sales in order to qualify for trips, bonuses, and incentives.”
Despite a 20% decline in sales from last- year’s first quarter, Allianz Life Insurance Company of North America, a unit of Germany’s Allianz SE, remained the sales leader. Its first-quarter sales were $1.15 billion, according to Wink, which provides competitive intelligence tools to those in the life insurance and annuity industry.
Capturing second place was Security Benefit Life Insurance, whose ultimate parent is Guggenheim SBC Holdings, with sales of $949.1 million. Ranked third was American Equity Investment Life, a unit of American Equity Investment Life Holding Co. (NYSE: AEL), with sales of nearly $879 million. Coming in at No. 4 was Aviva USA, a unit of the U.K.-based Aviva plc, with sales of $578.3 million. But Aviva’s sales declined sharply — by nearly half— from last year’s first quarter.
Allianz’s and Aviva’s sales at this time last year were relatively strong as compared to recent quarters, Moore said. However, both companies made changes to their products at the close of the third quarter of 2012 — reducing premium bonuses, increasing the charge for guaranteed lifetime withdrawal benefits and reducing commissions. “Those changes did not immediately impact sales, as there is always a sales push in the fourth quarter,” she said. However, the effect of those changes were reflected in first-quarter sales, Moore said.
Rounding out the top five was Jackson National Life Insurance, unit of the U.K.’s Prudential plc, with first-quarter sales of $531.4 million.
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 fixed annuities as a whole are down 11%, and some fixed annuity product types, such as traditional fixed, “have experienced sales declines of 25% or greater,” Moore noted.
Noteworthy changes in the quarter include the sales increases by Security Benefit Life and EquiTrust, both owned by Guggenheim, a private equity firm, Moore said. This “is consistent with these companies’ results for prior quarters,” she said. Security Benefit entered the market two years ago, and is now the No. 2-selling indexed annuity company. EquiTrust’s sales jumped more than 180% from last year’s first quarter. The company ranked 14th in sales this time last year and it’s now ranked sixth, Moore said.
Private equity firms are increasingly tapping into what they view as a potentially lucrative financial opportunity in fixed annuities, including indexed, in the United States (Best’s News Service, Jan. 16, 2013). After Guggenheim Partner’s purchase of Security Benefit Corp. in July 2010, Security Benefit was restructured to better align its balance sheet quality and investment portfolio while improving its business profile by implementing new initiatives for marketing, distribution and product strategies (Best’s News Service, Aug. 7, 2012).
Athene Holding Ltd. and its subsidiaries agreed to sell Aviva USA’s life insurance business to Commonwealth Annuity and Life Insurance Co., a subsidiary of Global Atlantic Financial Group. The transaction, structured as a reinsurance arrangement, is contingent on its pending acquisition of the U.S. annuity and life insurance business of Aviva plc. Athene, based in Bermuda, is backed by Apollo, another private equity firm (Best’s News Service, May 6, 2013) Aviva plc in December agreed to sell Aviva USA Corp. to Athene for $1.8 billion (Best’s News Service, Dec. 21, 2012). The sale will occur with the closing of Athene’s acquisition of Aviva USA.
As to the company’s new name, Moore said “we are rebranding because we felt that we had alienated our customers by running our business under so many different company names in the past.” Wink “better-represents our company’s mission and culture,” she said. “We are a competitive intelligence firm, and we’ve got the intel that you need,” she said.
Allianz Life Insurance Co. 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). American Equity Investment Life Insurance Co. and Aviva Life and Annuity Co. each currently has a Best’s Financial Strength Rating of A – (Excellent). Jackson National Life Insurance Co. currently has a Best’s Financial Strength Rating of A+ (Superior).
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com) BN-NJ-06-07-2013 1642 ET #
