W.D.M. annuity firms in top five for first quarter sales
June 3, 2014 by Matthew Patane
Rising on the backs of more people preparing to retire and a better-performing stock market, the sector had $10.9 billion in sales during the first quarter, according to Wink’s Sales & Market Report.
Top sales included two West Des Moines-based insurance companies: American Equity and Athene USA. Both ranked in the top five for sales from January through March, according to Wink, an insurance research firm based in Pleasant Hill.
Steven Weisbart, chief economist at the Insurance Information Institute, said sales of annuities have been on the rise since more of the baby boom generation is getting ready to retire. Annuities are structured to pay out a regular amount of income after an initial period of investment, making them popular among retirees.
The payouts on indexed annuities, Weisbart said, are also tied to the performance of certain indexes, such as the Standard & Poor’s 500.
“Last year’s stock market, in general, it was roaring ahead somewhat more than what people were forecasting,” Weisbart said. “(When) you have a product that says it will capture the majority of that, but protect you against the downside, that becomes very appealing.”
The annuities and insurance industries play a major role in the state’s and central Iowa’s economies. The Des Moines-area insurance hub employs more than 24,000 people alone and made up more than 19 percent of the metro’s gross domestic product in 2011.
American Equity saw its total annuity sales rise 0.3 percent to $881.5 million in the first quarter, according to the Wink report released last week. The company ranked third with a market share of 8.1 percent.
Unlike American Equity, Athene USA saw sales fall in the first three months of 2014. Athene’s annuity sales dropped to $571.8 million in the first quarter, down 13.5 percent from the same time a year ago. The company ranked fifth with a market share of about 5.3 percent.
The decline in annuity sales has become a trend for Athene USA since its parent closed on a $2.6 billion deal to buy West Des Moines-based Aviva USA in October.
Athene had $2.74 billion in annuity sales for the fourth quarter of 2013, a 34.6 percent decline from the same quarter in 2012, according to a Wink report released earlier this year.
Sales of annuities at the former Aviva had also been declining while the sale of the West Des Moines company was up for negotiation. The extended sale period caused both annuity sales and employment at the company to fall.
Athene Holding President Grant Kvalheim said in a statement that the company expected the Aviva purchase would affect its annuity sales. “We knew the acquisition would impact volume in the short term, but we are meeting our sales and financial targets, and we’re focused on profitable growth,” Kvalheim said.
Top five sellers
In the first quarter of 2014 (compared with first quarter 2013)
1. Allianz: $2.8 billion, up 142.22 percent
2. Security Benefit: $1.1 billion, up 15.95 percent
3. American Equity: $881.5 million, up 0.29 percent
4. Great American Insurance: $771.9 million, up 77.79 percent
5. Athene USA: $571.8 million, down 13.46 percent
