2Q Sales Plummet
ANNUITYWIRES
$20B $15B $10B
Few Bright Spots In 2Q Sales Tally
$5B $0
2Q18
2Q19
2Q20
SOURCE: Wink’s Sales & Market Report
There were a lot of gloomy faces among annuity sellers during the second quarter, as distribution was hit by twin killers: the COVID-19 pandemic and low interest rates. Annuity sales were down sharply in all but two product categories during the quarter, according to the Wink’s Sales & Market Report. Overall sales for all deferred annuities in the second quarter were down 12.8% when compared to the previous quarter and 21.2% when compared to the same period last year. The lone bright spots came via multiyear guaranteed annuity sales of $12.5 billion, up 25.6% compared to the previous quarter, and down just 0.3% when compared to the same period last year; and structured, or registered index-linked, annuity sales of $4.5 billion, up 9.3% over the 2019 second quarter. In other product lines, variable annuities were down 24.7% compared to the previous quarter and 25.6% year over year. Indexed annuity sales were down 21.8% compared to the first quarter, and down 34.8% year over year. “Everyone saw these sales declines coming from a mile away,” said Sheryl J. Moore, CEO of Wink Inc. “As everyone continues adjusting to COVID-19friendly selling, and the 10-year Treasury remains minuscule, sales are going to continue to be challenged.”
REGULATORS WORK ON ILLUSTRATIONS
State insurance regulators spent months and many calls trying to better regulate proprietary index components — only to realize they need more time. The Annuity Disclosure Working Group was given a time extension recently to continue its work to increase the time indexes must be in existence to be used in annuity illustrations from 10 to 15 years. Regulators are concerned that consumers are being misled by unrealistic indexed annuity illustrations. The group has a couple of more issues to iron out, said Mike Yanacheak, Iowa actuarial administrator. The working group needs to decide whether it wants to “make a recommendation to the A Committee related to whether there is a need for product approval standards for proprietary indices and whether there needs to be standards surrounding the relationship between the hedging provider and the index provider,” he said. DID YOU
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JACKSON NATIONAL GETS A NEW HOME
British insurer Prudential Plc. will spin off its American businesses, which include Jackson National Life Insurance Co., to focus on operations in Asia and Africa. Prudential Plc. will “pursue a full separation of Jackson by way of a minority Initial Public Offering (IPO) followed by full divestment over time,” Jackson said in a news release. The U.S. listing is planned for the first half of 2021, and Jackson does not currently expect to remit any regular dividends to Prudential Plc in 2020 or 2021. Accord ing to the Secure Ret i rement Institute U.S. annuity sales rankings, Jackson was the top seller of total annuities in 2019. Jackson retook the lead position after losing it to AIG in 2018.
QUOTABLE We’re adding wholesalers. We’re expanding into new firms as well as new channels. — Myles Lambert, chief distribution and marketing officer for Brighthouse Financial
Nevertheless, in the first half of 2020, Jackson’s profit fell by 19%.
CONSUMERS FLOCKING TO SAFETY
Consumers are again seeking safety as they did early in the Great Recession, but they are running toward different products during this economic downturn — a trend that is likely to continue long term. Todd Giesing, senior director, annuity research, Secure Retirement Institute, and Teddy Panaitisor, senior research analyst, SRI, explained the trends recently during LIMRA’s Life & Retirement Virtual Conference. The researchers see a softening annuity market for the rest of this year and next, with slow growth in 2022. “We expect sales to be down in the 8% to 15% range for 2020 compared to 2019,” Giesing said. “What’s interesting is this puts us in the same impact as we saw from the financial crisis in 2008. In 2009, where I believe sales were down 10 or 11%. “There are many factors going on but it’s basically a difficult pricing environment for indexed annuities, which is making alternative solutions such as fixed rate deferred and registered indexed linked annuities more popular.”
68% of registered investment advisors would consider recommending an annuity in cases where clients asked about annuities. Source: RetireOne and Jackson National Life Insurance Company
InsuranceNewsNet Magazine » October 2020