[ANNUITYWIRES]
ANNUITY BUYERS EYE INFLATION
Advisors Search For Big Ticket Income Annuities In the third quarter, advisors made over 121,600 searches for income annuities on the CANNEX (U.S.) database, a resource that advisors use to learn about single premium income annuity (SPIA) rates and products. A lot of those searches were for policies of substantial size, according to the CANNEX report. For instance, the average premium plugged into the system was nearly $228,000, up from third quarter 2011 average of $215,800. The search data provide a window into the profiles of potential SPIA buyers, too. Almost 58 percent of third quarter searches involved male buyers, for instance. The average age for male buyers was 68, and for women, 70.5. As for the source of funds that these buyers would probably use, it appears to be non-qualified money based on the fact that 77 percent of the third quarter searches involved nonqualified funds. Given the size of the premiums being searched, one might think that the potential buyers are strongly interested in the safety of the issuing company, and therefore might want to see the ratings of the carrier. However, a surprising 40 percent of third quarter searches did not include a request for ratings on the carrier.
ANNUITY SERVICE EXPANDING
Even though the annuity market continues to ruminate about carrier retrenchments and even exits, Depository Trust & Clearing Corporation (DTCC) is one third-party support firm that is actually expanding its annuity services . Specifically, DTCC data service is expanding its online Analytic Reporting for Annuities service, which offers data and analytical tools for identifying key trends in the annuities market. Lots of
annuity carriers use the service to keep tabs on annuity transaction trends and identify opportunities and enable them to get more robust data than in the past. That development should interest advisors, because it’s a subtle sign that the annuity infrastructure is continuing to grow, despite the economy-related market dislocations of recent times. Could new opportunities be far behind? DID YOU
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BROKERAGE TAKES UP ANNUITY/ RIA MATCHMAKING
The TD Ameritrade, Inc. brokerage has decided to help registered investment advisors (RIAs) get hooked up with annuities that might meet a client’s need. RIAs are not typically “annuity-first” producers since they tend to use a range of solutions.
But when a TD survey revealed that ‘securing a steady source of income in retirement’ is the top financial goal of more than two-thirds of investors, TD beefed up its annuity services for RIAs and now offers a “select list” of non-proprietary fixed, variable and deferred income annuities. It also of-
fers RIAs access to a dedicated team of insurance-licensed, non-commissioned annuity specialists, and – through those specialists – access to a cost/benefit comparison tool from Morningstar.
73 PERCENT OF ANNUITY OWNERS POLLED IN 2012 and 17 percent of
non-owners say annuities are an important part of retirement strategy, up from 55 percent and 8 percent, respectively, in 2011. Source: The Insured Retirement Institute and Cogent Research
InsuranceNewsNet Magazine » November 2012
Guaranteed income, advisor recommendation, and tax deferral continue to be the top reasons consumers purchase annuities, according to a 2012 study from The Insured Retirement Institute (IRI) and Cogent Research. Also on the buyers’ radar – inflation.
Six percent of surveyed investors said inflation protection is a reason to buy an annuity, up from just 1 percent of investors who gave the same answer in 2011, the researchers say. The shift is
worth noting, given that the Consumer Price Index (CPI), a common measure of inflation, has been quite low compared to historic averages. In August 2012, the average inflation rate for the 12 preceding months, based on the CPI, was 1.7 percent or half of the 3.4 percent average for years 1914-2012.
GIVING FROM THE GRAVE
Rupert Malchisky tried to pull the wool over the eyes of an annuity company, but the plot eventually came to light. According to an Associated Press story, the Rumford, Maine resident recently pled guilty for collecting more than $12,000 in annuity checks written out to – get this – his deceased mother. Malchisky’s ex-wife was reportedly
the person who cashed the checks. It’s hard to believe, but the theft and forgery went on for more than three years after the mother’s death in 2008. An insurance company investigator for the annuity carrier – Allstate Insurance Company – did uncover the scheme, according to AP.
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LIMRA: Internet Research Up For Annuity Info The study found that more consumers value information gathered online in 2012 than did in 2006, although it still lags behind insurance professionals. bitly.com/Internet _ Search
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