Fixed indexed are enjoying a surge in sales at time when other annuity products are slumping. One firm that has hopped on that wave is the Phoenix Companies, Inc. Two-and-a-half years after launching its fixed indexed annuity business, Phoenix has reached $1.5 billion in annuity funds under management.
The former variable annuity player made the switch to the FIA line in 2009, and according to Phil Polkinghorn, below, senior executive vice president and president, business development, for Phoenix, it did so for several reasons.
First, the independent distribution system for FIAs “plays better to us,” Polkinghorn said. It also fits into Phoenix’s capabilities in the areas of fixed income investment and hedging as well as product design and manufacturing, he added.
Further, back nearly two years ago, several carriers in the FIA space exited the business. “So it was a good time to move in as independent marketing organizations that depended on carriers for supply were in one way or another getting cut back,” Polkinghorn said.
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Serving the middle market
Another strategic decision Phoenix made was to focus on the middle market, which Polkinghorn classifies as younger people with incomes between $60,000 and $150,000 and net worth under $1 million for the older set. “It’s a large market, and it’s arguably underserved,” he said. “You can benefit from bringing some creativity to serve the needs of this market because things like affordability and safety are of paramount concern.”
For this year, Phoenix’s goal is to gain around $1 billion in deposits, Polkinghorn said.
Reaching that goal will be aided by several factors swirling in the marketplace. Chief among them are the preference by retirees and near-retirees for a reliable income stream in retirement that is protected from the tumult of the stock market. That is why the industry in general and Phoenix in particular has seen an increase in consumers opting for the guaranteed lifetime income riders in FIAs, Polkinghorn noted. More than 90 percent of FIAs sold by Phoenix contain a guaranteed income rider. Generally speaking, a fee of between 60 and 100 basis points is deducted from the account balance for that benefit, Polkinghorn said.