Insurers to build annuity distribution channels

Jan 30, 2006 @ 12:01 am

By Gary S. Mogel

NEW YORK - Insurers that offer variable and fixed annuities are developing new distribution channels for their products and strengthening existing channels.

ING USA Annuity and Life Insurance Co. added 10 wholesalers to its financial-institutions distribution channel, which sells variable and fixed annuities, mainly through banks. The Des Moines, Iowa-based company has 25 wholesalers in this channel dispersed throughout the United States.

"We have about 9% of the variable annuity market share in the wirehouse/broker-dealer channel, 9% in the bank channel and about 4% in the financial planner channel," said Christopher Condron, chief executive of AXA Financial Inc. in New York. "Our goal is to bring that 4% up to the 9% we have in the other channels, including by adding wholesalers."

Prudential Annuities, part of Newark, N.J.-based Prudential Financial Inc., is ramping up distribution in the broker-dealer, wirehouse and bank channels. The company created two management positions to oversee the new distribution focus.

John Hancock Financial Services Inc. in Boston appointed Tyler Carr, former head of its college savings unit, its new senior vice president of annuity bank distribution. He is responsible for marketing variable and fixed annuities through the bank channel and for training the insurer's bank wholesalers.

ING also is seeking to increase sales of its fixed-design channel, which sells mainly equity index annuities through independent marketing organizations. "We're penetrating down to the agent level to get the message out about our products," said Chad Tope, senior vice president of fixed-design sales.

Bank growth sought

"While we have increased variable annuity bank sales significantly this past year, there is huge future growth potential," Mr. Carr said.

"Banks have, in the past, traditionally sold fixed annuities, but we are getting them more involved on the variable annuity side," said Ann Hughes, senior vice president and head of business development for the ING retail annuities business group.

"With fixed rates low, bank clients are looking for alternatives," she said. "Because of their guarantees, variable annuities can be a good fit for many of those clients."

Prudential is increasing its marketing of variable annuities in the bank arena and building on its relationship with Wachovia Corp. The Charlotte, N.C.-based bank acquired Prudential's broker-dealer division in 2003.

"Banks have expanded their level of knowledge and have become far more sophisticated as it relates to variable annuities," said Matthew Schiffman, executive vice president and head of sales for Prudential Annuities.

"That old notion that bank salespeople aren't as good as those selling through other channels no longer applies," Ms. Hughes said. They have increased their knowledge through training, she added.

There also is more diversity in the bank client base, and it is no longer top-heavy with older clients for whom certain types of annuities may be inappropriate investments.

"In the past, banks may have had older clients, but now they are attracting a more diverse clientele, including younger investors," Ms. Hughes said.

Targeting reps, planners

"We've been number one in Merrill Lynch [& Co. Inc. in New York] and a significant player at the top 10 banks," Mr. Condron of Axa said.

The company is pursuing more business from registered representatives and financial planners affiliated with firms such as LPL Financial Services of Boston and San Diego, and Raymond James Financial Inc. in St. Petersburg, Fla.

Axa also writes variable annuities through its approximately 6,000 captive agents.

Prudential assigned two executives to spearhead its distribution strategies.

Alex MacGillivray, former national sales manager for the independent channel of Lincoln Financial Group of Philadelphia, became the national sales director of the wirehouse and bank channels. Rick Singmaster, a current Prudential executive who was with American Skandia before Prudential acquired it, now is the national sales director of the broker-dealer channel.

"In the broker-dealer channel, we added a 15-person business-development desk to initiate new relationships with producers to sell variable annuities. We were the No. 1 variable annuity seller in this channel in 2005," Mr. Schiffman of Prudential said.

"Distribution expertise and intellectual capital obtained when Prudential acquired American Skandia helped us expand in the wirehouse channel," he said. Within the past year, the company added New York-based UBS and Merrill Lynch to that channel.

Prudential is scheduled to do about 150 roadshows in the first quarter to promote its products in the broker-dealer channel, and it also will offer public seminars and continuing education credits for producers, Mr. Schiffman added.


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