Allianz: FIAs to Remain a Growth Engine

Allianz will continue to focus on fixed indexed annuity sales in the U.S. in the face of declining variable annuity sales, a top executive said Friday.

With U.S. variable annuity sales flat, “that means our focus to grow the business is clearly the fixed indexed annuity business,” said Dieter Wemmer, chief financial officer of the global insurance giant in a conference call with analysts.

New business premium in the U.S. for FIAs rose 15 percent in 2016 compared to 2015, the company said. Year-over-year new business premium for a hybrid variable annuity product jumped 117 percent.

Premium from the two product lines rose as management shifted its business mix in the life and health segment toward “capital-efficient” products and away from guaranteed savings products, the company said.

Allianz Life Insurance, Allianz SE’s U.S. subsidiary, was the top seller of FIAs through the first three quarters of last year with $8.2 billion sold, according to LIMRA Secure Retirement Institute data.

Allianz Life sold only $1.5 billion worth of variable annuities over the first three quarters of 2016, LIMRA data show.

FIAs are expected to finish the year with about $60 billion in sales, an increase of 11 percent from 2015, according to Wink’s Sales & Market Report.

By contrast, variable annuity sales, which reached $133 billion at the end of 2015, appear to be heading for a 25 percent drop in 2016.

Investors are drawn to FIAs because they offer higher returns than bank products in an era of low interest rates and robust equity markets.

Allianz SE on Friday also reported fourth-quarter net income of $1.8 billion, an increase of 23 percent over 2015.

Full-year net income attributable to shareholders was $7.3 billion, an increase of 4 percent over 2015, the company said.

“Allianz enjoyed a stellar finish in 2016 despite tough market conditions, leading management to propose another dividend increase,” Wemmer said.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at cyril.tuohy@innfeedback.com.

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