Voya is preparing to launch a hybrid, or buffer, annuity in the new year as the company seeks to take advantage of growth in a sparsely-populated niche of the annuity market, a company executive said.
“We have a buffer-style annuity product that is finished and ready for launch at the first of the year,” Carolyn Johnson, CEO of Voya’s annuities and individual life segment told analysts in a conference call.
Hybrid, buffer or structured annuities combine the elements of a fixed indexed annuity and a variable annuity.
They protect, or buffer, contract holders from market downturns to a limited extent in exchange for higher caps on interest credited to the policyholder.
Allianz Life, Axa, Brighthouse Financial and Member Life Insurance Co.’s CUNA Members Horizon also sell hybrid annuities.
Voya’s new product, to be called Voya Ascend Annuity, “is a very competitive offering against a limited number of competitors in one of the highest growth areas of annuities,” Johnson said.
Hybrid Niche Grows by Double Digits
Hybrid variable annuity sales in the second quarter rose 36 percent to $1.8 billion compared with the year-ago period. Hybrids account for about 7 percent of the entire variable annuity market, according to LIMRA Secure Retirement Institute.
The overall variable annuity market is expected to shrink by as much as 15 percent from last year’s sales of $105 billion, LIMRA forecasts indicate.
Hybrid annuity sales are expected to grow to $9 billion in sales this year, Johnson wrote.
New entrants into the market segment shouldn’t come as much of a surprise to analysts.
Voya Ascend Annuity offers “buffers” of 5 percent, 10 percent, 20 percent and 30 percent — “so we’ll have a wide range of options for customers with a wide range of risk tolerances,” Johnson wrote in an email after the conference call.
“We’re excited about our Ascend product and think it will be an attractive option to complement our growing product portfolio,” she wrote.
An advisory, or fee-based version of Voya Ascend Annuity is planned for later in 2018, she also wrote.
“Advisory-Style” in Vogue
Johnson said Voya plans to launch more “advisory-style” products in the annuity segment.
Advisory-style products appeal to fee-based advisors. Through the Department of Labor’s fiduciary rule, regulators have pushed the industry to develop more fee-based platforms.
In February, Voya launched a new indexed annuity branded as Voya Journey Index Annuity.
In August, the company introduced a mutual fund custodial account labeled Voya Select Advantage Advisory IRA, a new advisory-based platform to its mutual fund portfolio.
Select Advantage IRA, a commission-based product, comes in a fee-based version as well.
“We decided to design a fee-based version to give advisors more choice and options when working with their clients,” Johnson wrote.
“We also partnered with our retail broker/dealer and registered investment advisor, Voya Financial Advisors, which is now offering this platform to its national network of more than 2,000 independent financial advisors,” she wrote.
Voya Financial Misses Estimates
On Tuesday, Voya reported third-quarter net income of $148.6 million, after reporting a loss in the same period a year earlier, the Associated Press reported.
On a per-share basis, the New York-based company said it had profit of 81 cents. Earnings, adjusted for non-recurring gains, were 51 cents per share.
The results missed Wall Street expectations. The average estimate of 12 analysts surveyed by Zacks Investment Research was for earnings of 90 cents per share.
The company posted revenue of $2.55 billion in the period. Its adjusted revenue was $226.5 million, which also fell short of Street forecasts. Twelve analysts surveyed by Zacks expected $322.9 million.
Voya shares have increased slightly more than 2 percent since the beginning of the year. In the final minutes of trading on Tuesday, shares hit $40.16, a rise of 31 percent in the last 12 months.
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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