One could argue that virtually everything one does, and does not do, influences thinking and decisions, so where are the boundaries?
Feb. 27--Higher interest rates drove a turnaround for annuities in 2013, boosting profits at Allianz Life Insurance Co. of North America.
Operating profits at Allianz Life jumped 10 percent last year to $646 million, the Wayzata-based company said Thursday.
Total premiums, or sales, climbed 4 percent from a year earlier to $9.7 billion, after showing serious declines in recent years as rock-bottom interest rates took a toll. Sales of variable annuities continued declining last year, dropping 9 percent. However, sales of fixed index annuities jumped 11 percent.
Allianz Life is the country's No. 1 seller of fixed annuities.
Annuities are insurance products used for retirement, with a reputation for being complicated. At their simplest, buyers put down a lump sum for a regular stream of pension-like payments.
Fixed annuities offer a guaranteed payout, while variable annuities are higher risk and pay out based on the performance of underlying investments.
The entire annuities industry has seen a lift from higher interest rates, with U.S. annuity sales growing at their fastest clip in 11 years in the fourth quarter, according to the insurance research organization LIMRA in Windsor, Conn. That's driving more product innovation and new channels for marketing the products, the group says.
"You want to buy a house at lower interest rates, you don't want to buy an annuity at lower interest rates," said LIMRA spokeswoman Catherine Theroux.
Sheryl Moore, president and CEO of annuity research firm Wink Inc., said she thinks Allianz Life's relatively new "Allianz Preferred" program has boosted sales. The program gives distributors exclusive rights to sell certain Allianz Life products, offering agents a special commission.
"It's been a game changer in the indexed annuity market in my mind," Moore said. "The secret sauce is that commission structure."
The industry average commission for indexed annuities is 5.66 percent of the lump sum premium payment the buyer makes, according to Moore, a 17-year low.
Jennifer Bjorhus -- 612-673-4683
(c)2014 the Star Tribune (Minneapolis)
Visit the Star Tribune (Minneapolis) at www.startribune.com
Distributed by MCT Information Services