AXA Equitable CEO: Index Annuity Segment Getting Crowded

By Cyril Tuohy

It’s getting “crowded” in the index-linked annuity market.

That’s the word from Mark Pearson, president and CEO of AXA Equitable, a pioneer in a market segment that turned in double-digit growth rates last year.

“Yes, there is more competition, particularly in the space where we have our (Structured Capital Strategies) product,” Pearson told analysts in a conference call Wednesday.

“A number of competitors have come out with similar products in there – so a little bit more crowded there,” he said.

AXA Equitable’s Structured Capital Strategies index-linked annuity has been in the market for several years.

Since the beginning of this year, Lincoln, Great American and Great West have launched index-linked annuities to round out their annuity portfolios. Allianz, CUNA, Brighthouse are also active in the segment.

It was AXA Equitable’s first quarterly conference call since the company was spun off in May from its Paris-based parent AXA SA.

Last month’s IPO signals “an important new chapter” in the company’s 159-year history, Pearson said.

Fast-Growing Product Category

Index-linked annuities use indexes as a measuring stick with which to credit contract holders and most index-linked contracts limit market-related losses.

The product category has grown quickly.

Sales rose 25 percent last year to $9.2 billion compared with 2016, while the overall variable annuity market shrank.

With the Department of Labor fiduciary rule tossed by an appeals court, “we are beginning to see an improved operating environment for our company financial advisors and the services they offer,” Pearson said.

The overall VA market is forecasted to grow again this year.

Many indexed-linked annuities sit on a VA chassis and come with or without subaccounts, while other indexed-linked annuities sit on a registered fixed annuity chassis.

Flows Drop

AXA once had the index-linked market segment to itself, but the arrival of new competitors is a sign that maintaining market share is going to get harder.

Product net flows in the first quarter were $579 million, compared with $1.1 billion in the year-ago period, the company said.

First-quarter net flows were unusually strong last year in anticipation of the DOL fiduciary rule, Pearson said.

Structured Capital Strategies annuities with a term of five years are maturing and now that the term is up, contract holders are moving out of the product -- so the outflows were expected.

First-quarter net income was $168 million, compared to a net loss of $290 million, the company reported.

New York-based AXA Equitable Holdings is a holding company for AXA Equitable Life and asset manager AllianceBernstein.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].