P-E-owned fixed-annuity player makes inroads

By Darla Mercado

Dec 9, 2012 @ 12:01 am (Updated 6:31 pm) EST

Security Benefit Life Insurance Co. helped push indexed-annuity sales to record levels in the third quarter, illustrating that offerings from private-equity-owned firms are no flash in the pan.

The Guggenheim Partners LLC-backed insurer appeared on the list of the top five overall fixed-annuity players, with $1.03 billion in total sales in the third quarter, according to data from Beacon Research Publications Inc.

No. 1 for the period was Allianz Life Insurance Co. of North America with $1.31 billion, followed by Aviva USA with $1.064 billion, New York Life Insurance Co. with $1.06 billion and Security Benefit. American Equity Investment Life Holding Co. rounded out the top five with $982 million.

Overall, fixed-annuity results dropped 13% from a year earlier to $26.6 billion.

However, indexed annuities and income annuities picked up the slack, with $8.7 billion sold during the third quarter, up 0.5% from a year earlier. Income annuities, meanwhile, accounted for $2.4 billion in sales, boosted largely by sales of deferred-income annuities.

RECORD SALES

Both product lines are pulling record level sales year-to-date, with indexed climbing 4.5% to $25.7 billion and income annuities rising 9% to $6.8 billion.

Judith Alexander, director of sales and marketing at Beacon, noted that without Security Benefit Life's growth, year-to-date indexed-annuity results would have declined from last year's levels but instead were up by about $1.1 billion.

“Security Benefit is primarily offering competitive guaranteed- lifetime-withdrawal benefits,” she said.

There are benefits to being an insurer owned by private equity in this product line, Ms. Alexander said.

“Private-equity-owned companies have the advantage of being private. They are responsible to their investors, but they can afford to operate with less of a quarter-to-quarter focus than the stock companies,” Ms. Alexander said.

“Many also have larger investment operations than most of the longtime players in the fixed-annuity market,” she said.

dmercado@investmentnews.com Twitter: @darla_mercado