Prudential May Offer New FIA Through IMOs

Prudential Financial built its first fixed indexed annuity for financial advisors but the company might also sell it through independent marketing organizations.

Prudential distributes PruSecure alongside its variable annuities through its broker-dealer Prudential Advisors, independent broker-dealers, banks and wirehouses, but not IMOs. IMOs, which work mostly with insurance agents, hold a 60 percent distribution market share for FIAs.

PruSecure comes with commission and fee-based options, the latter of which are favored by registered investment advisors.

“We’ll look to expand products and features and to expand distribution partners in this segment,” said Dianne Bogoian, head of product for Prudential Annuities.

PruSecure, a single-premium FIA with a minimum premium payment amount of $25,000, offers five indexes from which to choose.

The index-based strategy uses a point-to-point crediting method and contracts may not be issued on or after the 86th birthday of the contract owner.

The annuity comes with a five-year surrender charge and a seven-year surrender charge, the company said.

FIA Sales Expected to Rise in 2018

Indexed annuity sales in 2017 fell 5 percent to $57.6 billion compared with record sales in 2016, but analysts expect FIA sales to rise this year as insurers and distributors adjust and move on from new Department of Labor fiduciary rules.

Allianz Life Insurance, the top seller of FIAs in the U.S., sold nearly $2 billion in the third quarter.

Prudential, based in Newark, N.J., launched PruSecure on Jan. 29, following months of discussions with advisors and distributors.

Advisors were clamoring for Prudential to broaden its product suite to offer annuities with an element of asset protection and the opportunity to participate in market growth, Bogoian said.

The company is expected to expand individual FIA product features as well as its FIA product line as the company fills a void in its annuity product suite, Bogoian said.

“In light of market demand, it’s important that advisors and clients have a trusted brand to turn to and a simpler more flexible option to consider,” she said.

FIAs have existed in the market for about 20 years.

New Launches to Complement Product Lines

Prudential sells single premium immediate annuities, variable annuities, variable annuities with optional benefits and now FIAs.

Any product changes and enhancements or new launches will complement the company’s annuity product families and not “pivot” from one type of annuity at the expense of another, she said.

“We do feel that we need to offer solutions in both variable and fixed offerings,” said Bogoian, who joined Prudential last May.

Asked if Prudential could enter the fast-growing buffered variable annuity segment, she replied, “We've got a lot of discussions going on for the product roadmap and we’re recognizing different trends going on.”

Prudential is readying the launch of a new deferred income annuity, the company said in a government filing.

The new Guaranteed Income for Tomorrow, or GIFT, annuity will be distributed through direct response solicitation via Prudential’s Group Insurance business, the company said.

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].