Lincoln To Launch First Buffered VA in May

Lincoln Financial, one of the nation’s biggest sellers of life and annuity products, is targeting a May launch for its first buffered variable annuity (VA), president and CEO Dennis R. Glass said Thursday.

Buffered VAs, sometimes referred to as indexed or structured VAs, are a fast-growing subsegment of the broader VA market, which is shrinking.

The new buffered VA would not usurp sales from fixed and other variable annuities sold by Lincoln, but would be offered “predominantly as in addition, not a replacement of existing sales,” Glass said in a conference call with analysts.

New customers and existing ones looking to add a buffered VA to a product suite they already own are likely to consider the new buffered VA, Glass said.

“Again, it's a very vibrant market already and so us participating in the market with our distribution and capability will broaden the market and possibly take some share,” Glass said.

While the overall VA market in 2017 is expected to fall below $100 billion in sales, buffered VA sales are growing quickly and forecast to hit about $9 billion in 2017.

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

Fourth-quarter and full-year 2017 annual sales data is expected later this month.

Buffered VAs a Match for Today’s Market

Buffered VAs are structured to protect, or buffer, 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.

Buffered VAs don’t require as much capital as traditional VAs that come with income guarantees. Adding buffered VAs allow insurers to diversify their VA book, analysts said.

Late last year, Voya Financial said it would launch a buffered VA in 2018. But that was before Voya’s Dec. 21 announcement that it planned to sell its closed block VA business, fixed and fixed indexed annuity businesses in a transaction involving Athene.

Voya, which holds its quarterly earnings call Feb. 14, has issued no update on the status of its planned buffered VA since it announced the Athene deal.

Lincoln Financial and Voya Financial brings to six the number of insurers selling buffered VAs in 2018.

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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