Lincoln Expands Annuity Wholesalers by 15 Percent in 2018

Lincoln Financial plans to increase its 240-strong annuity wholesaler force by about 15 percent in 2018 as the company prepares to enter the growing buffered variable annuity market, the company’s top executive said.

Most of the wholesaler increase “is going to be supporting product expansion in the bank channel,” through which Lincoln already distributes products, said Dennis R. Glass, president and CEO of Lincoln Financial, at an analyst conference.

Banks and broker-dealers are the preferred sales channel for buffered VAs, also known as indexed VAs, a segment of the variable annuity market which the company is preparing to enter.

“We’re also positioning ourselves for emerging growth opportunities and index variable annuity, which is selling well in the marketplace today, and we’re not selling them,” Glass said. “We will be in the first part of next year.”

Over the last several quarters, wholesalers have increased shelf space allocations to Lincoln Financial products and plans to devote still more space to Lincoln products is a sign of confidence in the Radnor, Pa.-based insurer.

Lincoln already has relationships with more than 700 wholesalers across all product lines and access to more than 90,000 independent producers.

Room for Growth in a $6 Billion Market

Buffered VAs, also referred to as structured VAs., represent a bright spot in an otherwise overall shrinking variable annuity market.

While the overall VA market in 2017 is expected to fall below $100 billion, the size of the buffered VA market is about $6 billion, “and that can get bigger,” Glass said.

Third-quarter sales of buffered VAs rose 15 percent to $1.7 billion compared with the year-ago period, LIMRA reported.

Buffered VA sales, about $2 billion in 2014, were forecast to hit about $9 billion this year. The products are structured to protect buyers against most market losses – but not the huge losses – in exchange for a higher cap on credited interest.

Insurers and distributors like buffered VAs because they are typically shorter-duration products and well matched for an era of low interest rates.

These new kinds of VAs don’t require as much capital as traditional VAs with income guarantees and allow insurers to diversify their VA book.

Policyholders benefit by taking advantage of increasing participation rates on indexed crediting factors at time when Standard & Poor’s 500 stock market index is closing in on gains of 20 percent this year.

Voya Financial also said it would launch a buffered VA next year.

With Lincoln Financial and Voya Financial joining the buffered VA market, six insurers will be selling the product next year.

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

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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].