Index Annuity Sales In 2004 Up 67% Over 2003
By Linda Koco
Index annuity sales topped $23.4 billion, making for another record year and nearly a 67% increase over 2003, says Jack Marrion, president of Advantage Compendium, a St. Louis, Mo., fixed annuity tracking service.
The numbers represent results of 35 insurers or roughly 95% of active index annuity providers. Marrion says this covers 99% of industry sales in 2004. Results of 4 insurers were estimated.
The 2004 total far surpassed 2003s $14+ billion and 2002s $11.7 billion. It is also higher than the $22 billion Marrion had projected for 2004 as recently as December.
The top-selling company was Allianz Life Insurance Company, Minneapolis, Minn. It reported over $7.8 billion in 2004 index annuity salesa 60% increase over sales for 2003, says Patrick Foley, president and CEO of Allianz Individual Insurance Group. Allianz has led the industrys index annuity sales for 5 years in a row, he adds.
Five other insurers also topped the $1 billion mark in 2004. These are Old Mutual, American Equity, Sun (Keyport) Life, AmerUs Group and ING.
Three trends, Marrion says, became more pronounced in 2004:
–At least 40 new products debuted during the year.
–Several carriers made market entries. These include: EquiTrust (completed its first full year in the market); Principal; AIG American General (re-entered the market); and Lincoln Benefit (entered the registered index annuity arena, following on its fixed index annuity presence).
–Broker-dealers and banks moved up a notch in market share. B-Ds grew from about 0.4% market share in 2003 to about 1% in 2004, while banks moved from about 3% to 4% of market share, respectively. Neither are major players, Marrion says, but since players in both channels have told him they plan to enter the market in 2005, he expects this growth will continue.
Why expect more growth for fixed indexed annuities at a time when the stock market is on a rebound?
Many consumers still are looking for “safe money places,” says Marrion. That means they want to put money into products that offer the safety of guarantees on principal as well as upside potential, he says, noting that this is what index annuities offer.
Also, awareness about IAs is growing not only in the career agency channel but also in the broker-dealer and bank channels.
More career agents have gotten “pumped” on the product, after attending the “intensive” training some carriers have provided, Marrion says. “The carriers found that face-to-face training works.”
Meanwhile, many reps in the B-D and bank channels went “gung-ho” after writing their first indexed contracts, he says. “Soon, they start writing 10 or 20 more contracts with no problem, and that will continue.”
Allianz has seen that firsthand. Registered rep sales of its index annuities increased significantly in 2004, says Foley. Its a fixed product, so the reps dont have to place it with their B-Ds, he points out.
That trend has not been lost on the B-Ds. “Were getting increased interest from B-Ds that want to have contracts with us to distribute our product,” Foley says.
Several other industry executives are reporting the same trend. A lot of this is being driven by the actions of registered reps themselvesthat is, some are liquidating securities assets and placing the money in index annuities elsewhere.