Wink CEO: Interest From Nontraditional Distribution Boosts 2014 Sales of Indexed Annuities
March 24, 2015 by Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com
PLEASANT HILL, Iowa – Continued interest in indexed annuities from “nontraditional” distribution is helping to boost sales while new companies continue to enter the space, said the president and chief executive officer of Wink Inc.
Total 2014 U.S. sales of these retirement savings and income products rose to $46.8 billion, up 21.3% from the same period a year ago, according to Wink, a firm that tracks the data.
Nontraditional distribution includes banks, broker-dealers and wirehouses, Sheryl Moore, president and CEO of Wink and Moore Market Intelligence, told Best’s News Service, who noted sales in 2014 represented a sixth consecutive record-setting year.
With indexed annuities — a type of fixed annuity — an 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.
Separately, for all types of annuities, sales rose 3% in 2014 to $235.8 billion, mostly on indexed and income annuities, according to Limra’s Secure Retirement Institute. Sales of stock market-linked variable annuities fell 4% to $140.1 billion — which represented their lowest sales annually since 2009, Limra said.
But for the first time, indexed annuities held more than 50% market share of all fixed annuity sales in 2014, according to Limra.
By company, Allianz Life Insurance Company of North America, a unit of Germany’s Allianz SE, once again maintained its position as the No. 1 seller, according to Wink. The company recorded total sales of $12.74 billion and a 27% market share.
Capturing second place was Security Benefit Life, whose parent is Guggenheim, a private equity firm, with sales of $4.18 billion and an 8.9% market share, according to Wink. Coming in at No. 3 were the American Equity companies, with sales in 2014 of $4.15 billion. Taking fourth place were companies of Great American Insurance Group, with sales of $3.1 billion.
Rounding out the top five was Athene USA, formerly known as Aviva USA, with total sales in 2014 of $2.5 billion, according to Wink.
New companies continue to enter the indexed annuity market, Moore said in the emailed comments. In 2014, there were several new entrants, including Horace Mann Life Insurance Co., Integrity Life Insurance Co., Nationwide Life & Annuity Insurance Co. and Thrivent Financial for Lutherans, she said.
“While these products are still largely providing solutions for those concerned about a guaranteed stream of income for life, there is an increasing percentage of sales that is focused on providing solutions for consumers concerned with accumulation of retirement assets,” Moore said.
Meanwhile, a small but emerging retirement savings and income product, a deferred-income annuity occupies a middle ground between fixed-deferred and immediate annuities. If the payouts begin within 13 months of purchase, it’s an immediate, and if they begin more than 13 months after purchase, it’s a deferred-income annuity, according to Beacon Research.
“Despite interest rates falling nearly a percentage point in 2014, indexed annuities and income annuity sales — fixed immediate and deferred income — topped record sales levels,” said Todd Giesing, senior business analyst, Limra Secure Retirement Institute, in a statement.
Allianz Life Insurance Company of North America currently has a Best’s Financial Strength Rating of A (Excellent).
