By Linda Koco
The 2014 individual annuity company ranking list is out from LIMRA Secure Retirement Institute (LIMRA SRI). That’s a big deal for annuity professionals, even if it’s “just data.” The reason is that the data reveal telltale signs of trends that impact everyday business. For instance, while carriers experienced moderate changes in rankings overall, they all but jousted for position in the fixed annuity sector.
We unpack some of the findings here.
In 2014, Jackson National took first place in on combined sales of variable and fixed annuities, with production of more than $24.5 billion. AIG took second place with combined sales of more than $18.9 billion, and Lincoln Financial Group took third place on combined results of more than $15.5 billion.
Noteworthy: These same carriers held the same rankings in combined variable/fixed annuity sales in 2013. Only one other carrier in 2014 did the same, but its rank was in the bottom half of the top 20.
The stay-at-the-top power of Jackson, AIG and Lincoln is head-turning in light of the fact that 13 other carriers saw their top 20 positions change in 2014. In addition, three companies from the 2013 list are not on the 2014 list, so three others took their places.
Those results might make it seem as if there was a lot of turbulence in ranks four through 20, but not all rank changes have significant impact on the marketplace.
For instance, five carriers saw their ranks drop by only one or two positions in 2014 based on combined sales, although one did drop by three positions. On the up side, five saw their ranking rise by one or two positions.
Those are the earmarks of a mildly competitive marketplace, not of one that sets off major sparks. That seems to align with the combined sales results for 2014. According to LIMRA SRI, total annuity sales hit $235.8 billion in 2014, up by just 3 percent from the previous year. Not bad at all considering economic conditions, but not phenomenal either.
The year did produce a couple of big changes in rank. These always get attention. Allianz Life is one such company. In 2014, it jumped five positions over the previous year to reach fourth place on combined sales of more than $14.9 billion. Much of this was due to the strength of its index annuity sales, which soared throughout the year.
The other big change was at MetLife. It dropped by five positions to 10th place in 2014. This came as no surprise to annuity professionals, or to the company. That’s because the carrier had signaled, well in advance, that it would be scaling back while it derisks.
Interestingly, in first quarter 2015, the company made a move that suggests the scaling-back days may be ending. It rolled out a new guaranteed lifetime withdrawal benefit rider for its variable annuities, along with commentary about wanting to be more competitive in the variable annuity living benefits market.
Variable annuity carriers
As noted earlier, LIMRA SRI also reports individual annuity sales rankings for the top 20 in variable annuities and top 20 in fixed annuities. Analysis of those figures for 2014 versus 2013 shows the variable annuity rankings track somewhat with the combined rankings, but with less shuffling around among carriers. Meanwhile, the fixed annuity rankings show a lot of shifts, some of them in the “big” category.
We’ll take the variable annuity market first. Two of 2014’s top three variable annuity carriers took the same ranking they held in 2013: Jackson National came in first on variable sales of nearly $23.1 billion, and Lincoln Financial came in second on sales of nearly $13.1. AIG moved up to third place, from fourth last year, on 2014 sales of more than $12.7 billion.
Significantly, seven other variable carriers also ranked in the same position as they held in 2013, making for nearly half (nine) position-holders in all, year-over-year. In addition, eight variable carriers moved only one position — five up and three down. One variable carrier did move up three positions, though, and one dropped by four positions.
Altogether, the variable annuity rankings suggest the business had a lot of predictability last year, with carriers keeping on and competing moderately.
Compared to the rash of market shifts, moratoriums, cutbacks and related upheaval in the variable annuity business during the post-recession period, 2014 might be viewed as a year that gave producers a breather. However, variable annuity sales got a breather too, falling by 4 percent to $140.1 billion, according to LIMRA SRI figures.
Fixed annuity carriers
The rankings on the fixed side of the individual annuity business reveal a lot of change, including some big reversals in year-over-year positions. The LIMRA SRI numbers include all types of fixed annuities —traditional deferred, index, deferred income, immediate income, etc.
In this market, the top three players all shifted position: Allianz moved up one to take first place on sales of nearly $12.8 billion. New York Life dropped one to take second place on sales of more than $7.5 billion, and AIG moved up one to take third, on sales of more than $6.2 billion.
In fact, position shift was in high gear in the 2014 fixed market. For instance four carriers moved down by four or more spots (one of them down by 10 positions), and two moved up significantly (by seven and nine positions). As for less dramatic moves, four carriers moved up either one or two spots (including Allianz and AIG, as mentioned earlier); five carriers moved down one or two spots, and one carrier moved down three spots. In addition, two new carriers appear on the 2014 list that were not there last year.
Only two fixed annuity carriers had no changes in position from 2013.
So there was a lot of jostling around in the fixed business. But there was also significant growth. Overall fixed annuity sales rose by 13 percent over 2013, according to LIMRA SRI. That was on sales of $95.7 billion.
A lot of that growth came from index annuity sales, which at $48.2 billion were 23 percent higher than in 2013, the researcher said. Sales of income annuities contributed too, with immediate income annuity sales totaling $9.7 billion (up 17 percent from 2013) and deferred income annuity sales totaling $2.7 billion (up 22 percent from 2013).
All of this suggests that the sales ranking game can be a lot more rough-and-tumble for annuity carriers than many people realize. A staid, predictable climate helps carriers keep their rankings or even gain a rank or two, as in the variable market last year. But a highly competitive market blows through the established order, creating new leaders and followers, with few carriers left untouched.
AnnuityNews Editor-at-Large Linda Koco, MBA, specializes in life insurance, annuities and income planning. Linda can be reached at email@example.com.
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