Nationwide Financial is looking to reverse a downward spiral in its variable annuity sales through banks with a product launched on Valentine's Day.
The Best of America All American Annuity is similar to Nationwide's Future product, its flagship annuity sold through banks for years, according to Matt Riebel, president of Financial Institution Distributors Agency, the unit of Nationwide that sells through banks.
"But this annuity has some things that banks have requested from us," Riebel said.
Among these is an augmented funds list. Four fund companies that are big distributors in banks but not part of the main Nationwide variable annuity were incorporated into the All American Annuity. The four companies are MFS, Van Kampen, AIM, and Alliance.
"Some banks requested that we have more of the top-selling funds through banks available, so that's what we've done," Riebel said. "Now we have seven of the top 10 fund companies through banks available in this product because we're also offering Fidelity, Federated, and Oppenheimer funds in the new annuity. Those three are also available in our flagship annuity."
The new annuity also pays different commissions to bank reps, he said.
"We can pay a little more in commissions with this product than the other product," Riebel said. "That was another request we had."
Nationwide released All American after a year in which its variable annuity sales slipped 46% while the industry's fell 29%, according to bank-insurance consultant Kenneth Kehrer Associates' fourth-quarter survey of annuity sales through banks. In 2001, Nationwide sold more than $1.2 billion of variable annuities through banks, making it the second-biggest distributor of the product in the bank channel.
Overall annuity sales through banks by Columbus, Ohio-based Nationwide rose 6% last year, to $3 billion, though this, too, was below the industry average of a 27% increase, fueled by record-setting fixed annuity sales.
"Our hope is that this stems the tide," Riebel said. "With variable annuity sales down everywhere, this is the time to take out a new VA. If we wait until sales are rising, it'll be too late. This is the time to do something about market share."
Kenneth Kehrer, president of the Princeton, N.J., consulting firm, agreed. "It takes time to get everyone acclimated to the new product," he said, "so you might as well go through that process before sales come back."
The addition of best-selling funds should shorten the time it takes for bank reps to get comfortable with the product, Kehrer added.
"They're already familiar with the characteristics of the funds," he said.
Riebel said that the new annuity could be used in proprietary annuity agreements with banks. Generally with a proprietary variable annuity, a bank's funds are included in the list of portfolios available to the investor. One pact has been reached, he said, with a bank that Nationwide did not previously have in a proprietary agreement but which he would not name.