Variable annuity market preps for features arms race

Midsize variable annuity writers such as John Hancock Life Insurance Co., Lincoln National Corp. and Transamerica Life Insurance Co. are expected to give the biggest sellers a run in the race for market share this year
MAY 11, 2011
Midsize variable annuity writers such as John Hancock Life Insurance Co., Lincoln National Corp. and Transamerica Life Insurance Co. are expected to give the biggest sellers a run in the race for market share this year. The competition is heating up now as insurers prepare their new VA filings. May tends to be the month when insurers update their prospectuses with the Securities and Exchange Commission, revealing new features and changes. “On balance, the variable annuities market is getting right back into the features arms race from 2004 to 2007,” said Randy Binner, senior vice president and senior analyst with FBR Capital Markets Corp. He authored a report, “2011 Channel Checks: VA, Life, Indexed Annuity Outlooks Positive, Fixed Annuity and LTC Outlooks Weak,” that was released last week. The biggest three VA sellers are Prudential Financial Inc., MetLife Inc. and Jackson National Life Insurance Co.

LINCOLN ON MOVE

Lincoln, coming in as the fifth largest VA seller last year, is expected to gain market share this year and in 2012 as its competitors re-price their products, according to Mr. Binner's report. Lincoln hasn't matched the likes of Prudential and Jackson National in terms of dramatic growth over the last two years. Lincoln's market share has held steady at 6% since 2009, down slightly from 7% in 2008, while Prudential had 15% of the market share, up from 7% in 2008. Jackson National accounted for 10% of VA market share last year, up from 4% in 2008, according to data from LIMRA. However, Lincoln's stable fee history will be a trump card and boost its standing in market share, according to the report. Meanwhile, Transamerica is offering risk-based pricing guarantees. That could allow for a higher guaranteed feature, Mr. Binner said. The news remains largely positive for the second-ranked seller of variable annuities, MetLife. The insurer this summer is expected to roll out a new variable annuity that may have self-hedging features that could cut the cost of hedging and permit MetLife to offer richer features. Mr. Binner said that he is overweight overall on VA sellers, as insurers are strongly capitalized and the outlook is strong for variable annuities. “We have "buys' on lots of these companies,” he said. “We think the industry is strongly capitalized and that the companies are trading below book value.” E-mail Darla Mercado at [email protected].

Latest News

Why the off-channel comms problem is far from solved
Why the off-channel comms problem is far from solved

Despite a lighter regulatory outlook and staffing disruptions at the SEC, one compliance expert says RIA firms shouldn't expect a "free pass."

FINRA penalizes another broker dealer for social media miscues
FINRA penalizes another broker dealer for social media miscues

FINRA has been focused on firms and their use of social media for several years.

Advisor moves: LPL recruits Merrill alum, Raymond James adds defectors from Edward Jones and Janney
Advisor moves: LPL recruits Merrill alum, Raymond James adds defectors from Edward Jones and Janney

RayJay's latest additions bolster its independent advisor channel's presence across Pennsylvania, Florida, and Washington.

Cantor Fitzgerald to acquire hedge fund unit from UBS
Cantor Fitzgerald to acquire hedge fund unit from UBS

The deal ending more than 30 years of ownership by the Swiss bank includes six investment strategies representing more than $11 billion in AUM.

Navigating life’s big transitions for women clients
Navigating life’s big transitions for women clients

Divorce, widowhood, and retirement are events when financial advisors may provide stability and guidance.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave

SPONSORED The evolution of private credit

From direct lending to asset-based finance to commercial real estate debt.