Changes to variable annuity contracts and new filings slowed in the third quarter, dropping to 84 from 182 in the previous quarter and 106 from a year ago, reports Morningstar.
The deceleration is due to two factors, said John McCarthy, product manager, insurance solutions. First, the second quarter is typically a busy time because carriers are required to re-file their prospectuses by May 1. Those changes were further heightened by the persistent low interest environment, which forced carriers to rejigger their products even more, McCarthy noted in an interview.
With not much movement in sight on interest rates for the foreseeable future, carriers have probably made as many adjustments (fee hikes, benefits cuts) as they can to achieve stability. Therefore, they now are taking a wait-and-see stance until interest rates bounce back. “The situation hasn’t changed much in terms of interest rates,” McCarthy said. “They’ve gone up a bit, but not enough to make too much of a dent in the way they offer the benefits.
Nevertheless, several notable changes occurred or are scheduled to take place in the third quarter. In September, AXA Equitable rolled out its buyback offer to owners of certain living benefits for its Accumulator VAs issued between 2004 and 2009. MetLife, Nationwide and Prudential (via a cap) all limited subsequent payments to contracts and benefits. Meanwhile, Hartford set an Oct. 4 deadline for owners of the Director M series to reallocate their investments or face losing the lifetime income rider.
On the new filing front, Allianz launched a new hybrid variable annuity, the Index Advantage. Jackson National re-released the joint versions of its living benefits after a hiatus.
VA sales hit the brakes