Jackson National Life has once again put a year-end lid on certain types of variable annuity business that it will accept.
The action might be a jolt to variable annuity producers who have been thinking that the days of variable annuity suspensions ended with the recovering economy. Some might wonder if the action signals the beginning of a new round of curtailments in the broader variable annuity marketplace.
It’s true that the industry is still in a “tender recovery” period from the economic struggles of the post-recession years. However, the Jackson action looks more like risk management process than a carrier joining up with a herd that is making a mad dash for the exit.
Here is why: The move is a temporary measure, designed to last no more than seven weeks. This doesn’t mean that advisors and clients will like it. But it does mean that an end to the limit period is in sight, making it easier for advisors and clients to plan around.
In addition, Jackson is saying it is committed to the business and wants to grow it within certain parameters. Advisors are well aware that intentions may not see fruition, but the messages are being made publicly, so it’s likely the statements are being made with all seriousness. (Not incidentally, a few other carriers have made somewhat similar statements lately. It could be a new bottom is forming on carrier exits, with carriers that are in the business firming up their resolve.)
The Jackson limits
The Jackson limits go this way: The carrier will not accept new 1035 exchange business or qualified transfers of assets for variable annuities that offer optional guaranteed benefits between Oct. 25 and Dec. 15 of this year. However, the company plans to resume accepting such business on Dec. 16, 2013.
The reason given in a company statement is to “manage sales volumes.”
In the same statement, the insurer indicated it intends to stay in the annuity market, both variable and fixed.
For instance, it said it will continue to accept new 1035 exchange business or qualified transfers of assets for Jackson’s Elite Access variable annuity as well as for its fixed or indexed annuity products. (The Elite Access product offers traditional and alternative asset investment options as well as risk management and tactical management strategies, but is not designed for clients seeking guaranteed lifetime benefits.)
Mike Wells, Jackson president and chief executive officer, underscored the point, stating that “the variable annuity market remains attractive for Jackson and we are committed to writing new business within our overall appetite for risk.”
Securian is another carrier that has affirmed continued interest in staying in the market.
Dan Kruse, second vice president and individual annuity actuary at Securian, recently said that his company’s risk-managed approach to the variable annuity market is “designed for longevity,” and that “we’re here to stay with the goal of providing products that meet a wide range of consumer needs.”
The comment came in a mid-October press release the company issued when debuting an optional suite of living benefits options for its MultiOption variable annuities.
Another example came during a panel discussion at LIMRA’s annual meeting in mid-October. Panelist John Kennedy of Lincoln Financial Distributors pointed out that his company has been one of the benefactors of some variable annuity companies that pulled back a little bit over the past couple of years.
His firm “sold through the market” in 2007 and 2008, he said, and that has created “a great block of business.”