Indexed life and indexed annuities set consecutive sales records in 2011
By Sheryl J. Moore
Moore Market Intelligence
March 15 - Forty-one indexed annuity carriers participated in the 58th edition of AnnuitySpecs.com’s Indexed Sales & Market Report, representing 99% of indexed annuity production. Total fourth quarter sales were $8.2 billion, down just under 5% from the previous quarter. As compared to the same period last year, sales were down less than 1%. Total 2011 indexed annuity sales set a record at $32.3 billion; an increase of less than 1% over the previous year.
“This was the fourth consecutive record year for indexed annuity sales!” said Sheryl J. Moore, President and CEO of Moore Market Intelligence, the firm that owns AnnuitySpecs.com. “When you consider today’s historical-low rates on fixed money instruments, it seems inconceivable that fixed products would appeal to consumers at all. However, you must remember that the value proposition of these products is the minimum guarantee; this is the feature most-attractive to savers. Indexed annuities in particular offer a guaranteed floor of no less than zero, a minimum guaranteed surrender value (should the market not perform), AND guaranteed lifetime income that you cannot outlive. Why wouldn’t sales of indexed annuities be on the rise today, given such attractive features?”
Worth noting this quarter was the fact that Allianz Life maintained their position as the #1 carrier in indexed annuities with a 17% market share. Aviva took the position as the second-ranked company in the market, while American Equity, Great American (GAFRI) and Midland National Life rounded-out the top five, respectively. Allianz Life’s MasterDex X was the #1 selling indexed annuity for the 11th consecutive quarter.
Driving sales of indexed annuities, Guaranteed Lifetime Withdrawal Benefit (GLWB) elections hit a record 58% of total sales this quarter. The riders are increasingly being utilized to guarantee income- nearly 14% of indexed annuity owners that had elected a GLWB rider are actively taking guaranteed lifetime income payments under the endorsement today.
For indexed life sales, 42 insurance carriers participated in the AnnuitySpecs.com’s Indexed Sales & Market Report, representing over 99% of production. Fourth quarter sales were $321.1 million, an increase of nearly 28% over the previous quarter. As compared to the same period in 2010, sales were up over 45%. Total 2011 indexed life insurance sales were just short of $1 billion at $973.9 million in target premium; another sales record. This quarter marked the fourth consecutive record quarter for indexed life insurance sales, in addition to the second consecutive record year for sales of the products. The 2011 sales record exceeds 2010’s record by nearly 40%. Moore remarked, “The level of activity in the indexed life insurance market will not be waning soon.”
She went on to comment, “Not only are many more companies on the verge of offering IUL, but when next year’s sales exceed $1 billion of target premium, everybody will doing it! We’ve already seen extended no-lapse guarantee (ENLG) sales drop to 40% of the total UL market; indexed life accounts for a growing 20% of total UL sales! Given the potential impact of regulation AG38, I’d predict that indexed life sales will not only continue to hit record levels for years to come, but that IUL sales will inch closer to surpassing sales of ENLG products.”
Items of interest in the indexed life market this quarter included AXA Equitable maintaining the #1 position in indexed life with a 16% market share. Aviva took the position as second-ranked company in the market, while Pacific Life Companies, AEGON Companies, and National Life Group rounded-out the top five companies, respectively. AXA Equitable’s Athena Indexed UL was the #1 selling indexed life insurance product for the third consecutive quarter. Twenty percent of IUL sales continue to be for objectives other than cash accumulation.
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The staff of Moore Market Intelligence has over a decade of experience working with indexed insurance products. The firm provides services in speaking, research, training, product development, and marketing of indexed annuities and indexed life insurance. Their knowledge in product filing research and policy forms analysis, coupled with their unmatched resources in insurance distribution, give them the expertise to provide competitive intelligence that allows carriers to stay ahead of their competition. Sheryl J. Moore is president and CEO of this specialized third-party market research firm and the guiding force behind the industry’s most comprehensive indexed life and indexed annuity due diligence tools, AnnuitySpecs.com and LifeSpecs.com. Ms. Moore previously worked as market research analyst for top carriers in the indexed life and annuity industries. Her views on the direction on the indexed market are frequently heard in seminars and quoted by industry trade journals.
Moore is the author of the quarterly AnnuitySpecs.com’s Indexed Sales & Market Report. Serving as the insurance industry’s #1 resource of indexed insurance product sales since 1997, this report provides sales by product, company, crediting method, index, distribution, surrender charge period, and more.
March 13, 2012
Pleasant Hill, IA