ING to shutter registered indexed annuity

ING Groep NV will close its registered indexed annuity to new sales Oct. 31 after a little more than a year. Low interest rates were a major driver in ING's decision to shutter the annuity, according to Chad Tope, president of ING Annuity and Asset Sales. Indexed annuities typically have two ways to grow: They can receive a capped amount of growth tied to the performance of an index and they can credit a guaranteed minimum level of interest when the index is flat or has negative returns. ING's registered product paid a 1% minimum guaranteed rate, so it would have to be able to pay more than that, Mr. Tope noted. The product faced pressure from current low interest rates. Insurers are able to pay that minimum guaranteed rate based on returns they get from their investments in corporate bonds. Broker-dealers and wirehouses that sell the product like that it's registered, so ING is currently in talks with these distributors to get them to sell the unregistered version instead, Mr. Tope said. Wells Fargo Advisors has decided to sell the unregistered indexed annuity, and the insurer is discussing the matter with UBS Financial Services Inc. and Bank of America Merrill Lynch, he added. “We treat the nonregistered indexed annuity just like the registered product in terms of support,” Mr. Tope said. Calls to Wells Fargo, UBS and BAML for further comment were not immediately returned.