The Penn Mutual Life Insurance Co., a burgeoning player in the variable annuity space, recently let go of a team of wholesalers and relationship managers.
The carrier, which ended 2012 with just under $1 billion in sales, laid off seven regional directors and two relationship managers on its annuity side in September. The layoffs come close to a year after the insurer decided to sever its relationships with a slate of independent broker-dealers. Last November, Penn Mutual trimmed its selling agreements to 30 distributors, from 80.
“We wanted variable annuity sales, but we didn't want too much,” said Tom Harris, executive vice president of distribution at Penn Mutual. “Now the position is to remain committed to the annuity space, and manage the fixed and variable, but we'd like to go through [Hornor Townsend & Kent Inc.] and Janney Montgomery Scott LLC.”
HTK is the broker-dealer for Penn Mutual's career agency system, and Janney Montgomery Scott is a wealth management subsidiary of the life insurer.
Penn Mutual brought on the wholesaling team in the early 2000s to build the insurer's presence among independent broker-dealers and push distribution of its variable annuity and variable-life product lines.
“The way we want the sales moving forward is through our proprietary distribution,” Mr. Harris said. “We didn't feel it was appropriate to have this team of people who were designed to drum up business in the broker-dealer space. It didn't make sense for us. We have a capacity, and we want to sell at this capacity.”
Going forward, the carrier's sales desk will handle contact with the distributors, he added.
In 2013, Penn Mutual decided that it would aim for just more than $700 million in sales, and so far, the company is on track to meet that goal, Mr. Harris said.
Indeed, the insurer is light-years away from reaching the sales levels of the top three variable annuity sellers in the first half of the year: Jackson National Life Insurance Co., Lincoln National Corp. and Prudential Financial Inc. For instance, Pru sold $6.63 billion in variable annuities during that time, according to LIMRA.
Nevertheless, Penn Mutual has some very attractive products on its shelf. For instance, its Smart Foundation variable annuity offers 7% step-ups to clients' withdrawal benefit base, as well as a withdrawal rate of up to 5%, depending on the age of the client at the time of the withdrawal and whether it's a single or joint withdrawal benefit.