Ohio National Financial Services has entered the fixed indexed annuity (FIA) market for the first time as the company takes advantage of robust sales trends in the product category, company executives said.
The company’s ONdex FIA comes in several versions.
ONdex Annuity offers four crediting strategies while ONdex Freedom offers only three of the four crediting strategies, said Ian Laverty, vice president of annuity product management for Ohio National.
ONdex Freedom does not include the option based on a custom index, he said. He added that a fee-based version of ONdex will follow in the future.
The third version offers three crediting strategies different from the ones offered by ONdex Freedom to conform to requirements of the company’s distribution partners.
“The customers that we service have different risk tolerances, and we are a company for all seasons,” Laverty said.
FIAs are one of the fastest growing segments among fixed annuities. Insurers sold $61 billion worth of FIAs last year, an increase of 12 percent compared with 2015, industry data indicate.
Entering the FIA market gives Ohio National the opportunity to grow, but also diversifies the company’s internal risk exposures within the annuity market, Laverty said.
Ohio National’s competitors Nationwide, Symetra and Great American sell FIAs.
Distributing Through Wirehouses, IBDs and Banks
Ohio National, which has traditionally sold variable annuities, is distributing ONdex through wirehouses, independent broker/dealers and banks.
For the moment, the company will concentrate on selling through its long-established institutional relationships, but eventually plans to expand into other distribution channels, Laverty said.
“When we get to capacity there in these channels we may look to the independent marketing organizations (IMOs),” he said..
Nationally, IMOs are responsible for about 60 percent of FIA sales, according to industry data.
New Department of Labor rules also convinced Ohio National to sell ONDex FIAs initially via registered channels only – although the DOL rules may be delayed.
Advisors like FIAs because they offer retirement and pre-retirement investors attractive options for their “safe money,” or money that is traditionally locked into certificates of deposit or other bank products. That was the word from Gary Phifer III, assistant vice president and sales and marketing officer for Ohio National’s Annuities Strategic Business Unit.
Low interest rates don’t make those bank products very attractive. In comparison, FIAs offer principal protection with an opportunity to earn potentially more interest, Phifer said.