Prudential reverses variable annuity suspension in New York
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The decision follows a similar route taken by peers like Jackson National and Lincoln Financial.
Prudential Financial Inc. will reintroduce its fee-based variable annuities in New York, following a suspension of its product sales a few months ago in connection with the state’s new best-interest rule for annuity and life insurance sales.
The insurer, which was the third-largest seller of annuities in the U.S. last year, is reintroducing its Prudential Premier Advisor annuity in New York on Monday, according to a memo sent to advisers Friday that was viewed by InvestmentNews. In an earlier note sent July 31, Prudential said it was suspending sales in New York.
Prudential was the No. 7 annuity seller in New York last year, with $1.1 billion of sales, according to the National Association of Insurance Commissioners. The company sold $17.6 billion of annuities nationwide, placing behind Jackson National Life Insurance Co. and American International Group.
Other insurers, such as Jackson National and Lincoln Financial Group, had also pulled their fee-only annuities for clients of registered investment advisers from the shelf in New York in recent weeks.
A New York rule upping the sales standard for brokers and agents recommending certain insurance products to consumers took effect for annuities on Aug. 1. (It takes effect for life insurance products Feb. 1.) Insurers that sell both fee- and commission-based annuity products in New York were concerned about a specific disclosure requirement contained in the rule, Insurance Regulation 187.
The New York rule, which requires agents to make insurance recommendations in consumers’ best interests, mandated that insurers offering both fee-based and commission annuities provide consumers with a comparison showing the differences between the products.
The New York Department of Financial Services issued guidance on Sept. 11 that removed some of the big question marks that insurance companies had about the disclosure.
“The New York Department of Financial Services has provided updated guidance and sales of the product will resume while we partner with the NYDFS to obtain approval of a comparison disclosure,” according to Prudential’s memo.
Lincoln reintroduced its fee-based annuities in New York on Sept. 30, spokeswoman Amy Norcini said.
New York’s best-interest rule, which was upheld in state court in August, is one of the ways in which the state’s Department of Financial Services has recently cracked down on insurers licensed in the state.
The regulator has also opened an investigation into insurers’ 403(b) fees and sales practices, and on Tuesday sent several insurers requests for information on how they’re marketing these retirement programs to teachers.
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