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Annuities Should Do Well: IRI

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Participants in the variable annuity industry say retirement income and principal protection features, should help VA products do well.

The Insured Retirement Institute, Washington, and Cerulli Associates, Boston, joined to conduct a survey of executives at more than three dozen companies.

The participants, who were interviewed in the first quarter, included executives at insurance companies, variable annuity asset management firms, and broker-dealers.

The executives surveyed ranked growth opportunities for variable annuities at 4.1 on a 5-point scale, and for fixed annuities at 3.2 on the same scale, according to the IRI and Cerulli researchers.

Deferred variable annuities, in particular, are expected to have fairly strong growth potential, the researchers say.

Other findings:

- Nearly two-thirds of the insurance executives said they either offer simplified annuities, or plan to do so in the coming 12 to 18 months.

- Financial strength ratings and living benefits are the most important factors when B-Ds select a VA provider, with both factors earning a 4.6 rating.

- Living benefits and financial strength ratings are also highly valued by advisors who are selecting a VA provider, with 72% considering living benefits and 80% looking at ratings.

- Financial strength rating ranked as the top attribute that insurers are using to position VAs in 2010, with that factor earning a 3.9 importance rating. The second leading attribute was advisor meetings (road shows, etc.), at 3.8, followed by guaranteed lifetime income strategies, wholesaler training on product features and wholesaler training on product positioning, each of which earned a 3.7 rating.

The findings underscore the growth potential resulting from the retirement income security provided by annuities, says IRI President Cathy Weatherford.

“Robust living benefit guarantees help balance out possible market volatility with a level of protection,” Weatherford says.


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