Having reached what it considers its limit for sales of variable annuities that offer optional guaranteed benefits, Jackson National temporarily suspended 1035 exchange business or the transfer of qualified assets into variable annuities with those elective riders.
The time frame for the suspension period runs from 4 p.m. EST Oct. 25 to Dec. 16. The program does not apply to Jackson’s Elite Access variable annuity (VA) product or the company’s fixed or fixed indexed annuities.
Jackson National undertook a similar initiative last year to manage its sales volumes. “As part of our active risk management program, we seek to balance our guaranteed and non-guaranteed business to avoid a concentration of exposure to any single product type in any one year,” said Mike Wells, Jackson National’s president and CEO, in a statement. “The variable annuity market remains attractive for Jackson and we are committed to writing new business within our overall appetite for risk.”
Industry-wide, variable annuities that offer lifetime income benefits have caused some carriers fiscal angst of late, as those long-tail obligations have cut into reserves in a low interest rate environment. Benefit reductions and fee hikes have become somewhat commonplace and several carriers have extended buybacks offers to owners of legacy VAs in an effort to lighten the long-term commitment of lifetime guaranteed income to policyholders.
A spokesperson for Jackson National declined to specify the ceiling the company has set for its VA sales this year. According to second-quarter, year-to-date stats from LIMRA, Jackson National was the top seller of annuities overall ($11.7 billion) and variable annuities ($10.3 billion).
In an email, John McCarthy, product manager, annuity solutions, at Morningstar, said he had no insight into the impetus behind Jackson National’s recent move. He did note that other carriers have taken similar actions to curtail inflows when they deemed VA sales have reached their targeted level. Those other methods include limiting subsequent payments into VAs for current clients, shutting down different rider options (such as closing the joint life versions of the benefits) or restricting new purchases of either qualified or non-qualified contracts.
“Lots of ways they are drilling down and controlling their inflows,” he wrote. “For the advisor, it means they need to keep on top of the changes.”