Variable annuity shops eye property and casualty insurers to expand distribution

Some of the largest variable annuity shops have forged new distribution relationships with property and casualty insurers in a bid to boost sales. Jackson National Life Insurance Co. and Lincoln Financial Group, for example, will begin distributing annuities — both variable and fixed — through property and casualty insurers next year. Jackson National's partnership with State Farm, which has roughly 19,000 agents, is planned to kick off in the second half of 2019, said Alison Reed, executive vice president of operations for Jackson National Life Distributors. Lincoln's distribution through Allstate, which has around 10,000 agents, will begin in January. Dennis Glass, president and CEO of Lincoln, expects the arrangement to initially add around 5% to annuity sales growth. "A lot of the bigger insurance companies are really looking at this channel as an opportunity for growth," said Kevin Kennedy, head of individual retirement at AXA Equitable Life Insurance Co. "It seems like everybody is trying to go down that rabbit hole." AXA has distributed its variable annuities through property and casualty insurers, including Allstate and Farmers Insurance Group, for more than six years. The channel now makes up 10% of its annual annuity distribution, and Mr. Kennedy expects that share to continue growing. Jackson, AXA and Lincoln are respectively the No. 1, 3 and 4 sellers of variable annuities this year through the third quarter, according to Limra, an insurance industry group. Although variable annuity sales were up 25% in the third quarter from a year ago and they are projected to be up 4% this year, they are coming off six consuecutive years of declining sales, according to Limra. "Variable annuity products have declined a lot and this is a relatively new channel for them to gain distribution," said Steven Saltzman, principal of consulting firm Saltzman Associates. "It's a good, viable source of alternate distribution for these companies." Mr. Saltzman as well as insurance executives view the distribution channel as a natural progression for annuity shops, since property and casualty insurance agents offer other forms of insurance protection but are lacking for product on the retirement side. Not all the property and casualty agents will be able to distribute variable annuity products, however — they will need their securities licenses, in addition to an insurance license, in order to sell them. They will only need their insurance license to sell a company's fixed annuities, however.