Annuities

As banks and insurers compete in the lucrative retirement market, new numbers show a marked uptick in the sale of annuities at bank holding companies in the first half of 2011.

Financial advisors are in huge demand among insurance companies that create the broad array of insured retirement income products. But if product creators want to succeed with that group, they need to get a few ground rules clear, a panel of financial advisors said during the Insured Retirement Institute’s annual conference on Tuesday.

Financial advisors are going play a bigger role in how the annuity industry gets it products to customers, according to industry officials presenting at the Insured Retirement Institute's 2011 annual conference. But consumers will be leading the charge.

Among current retirees, annuities account for only an average of 4% of household income. That’s the finding of a new study of annuity use among retirees and near retirees just released by LIMRA, the Connecticut-based financial industry research organization.

Annuities sold at a brisk pace in the second quarter, setting the stage for a record year of sales, according to the Insured Retirement Institute.

In an effort to expand its annuity business, The Hartford is expanding into the structured settlement annuity market, providing tax-free payouts to people who receive settlements related to a workers’ compensation or personal injury claim.

Variable annuities continued to surge in the second quarter of this year, with total sales reaching $40.9 billion, an increase of 16% over the same period last year, according to LIMRA, the Windsor, CT-based financial services research firm.

The fact that both fixed and variable annuities posted sales increases in June wasn’t quite as rare as summer snow, but it was enough to raise eyebrows among industry watchers.

Annuity fee income at bank holding companies (BHCs) shot up 28.4% in the first quarter to more than $748 million, according to the Michael White-ABIA Bank Annuity Fee Income Report.

DTCC Insurance & Retirement Services has launched a new analytic reporting service for insurance carriers and broker-dealers that sell annuities.

Life insurance sales through banks, which set records in 2010, are now trending downward sales fell 30% in the first quarter, according to research firm Kehrer-LIMRA.

Not only have investors lost faith in the stock market, but a substantial number say they will never invest in the stock market again, according to a survey released on Friday by Prudential Financial.

For the first time in two years fixed annuity sales rose, according to the Beacon Research Fixed Annuity Premium Study released on Thursday.

Guaranteed living benefits were adopted, when they were offered with variable annuities, 86% in the first quarter, according to LIMRA. That was down from a peak of 90% in the first quarter of 2009, notes Dan Beatrice senior analyst, retirement research with LIMRA.

Continuing a comeback after a difficult 2010, annuity sales through banks topped $4 billion in March to reach their highest level since exactly two years earlier, according to research firm Kehrer-LIMRA.

Variable annuities sales in 2011 climbed significantly in early 2011, continuing a trend begun last year, and reversing a slide that saw them fall from a high of $184 billion in 2007 to a low of $128 billion in 2009.

Product includes portfolios managed like institutional and endowment funds.

Allianz Life Insurance Co., the largest annuity provider in the U.S. with more than $2 billion in sales last year, this week announced a strategic partnership with seven broker-dealers that will add its Allianz Retirement ProSM variable annuity to their advisory platforms.

How is a financial advisor supposed to go through the array of annuity products on offer and find the best ones for each client’s investment and retirement needs, especially when many of the products on offer are changing almost every year?

According to data compiled for IRI by Morningstar, Inc., new sales were $136.6 billion in 2010, up 10.3% from 2009, when new sales totaled $123.9 billion. What’s more, assets reached an all-time high of $1.5 trillion, finally lifting the variable annuity industry above the pre-crisis levels of the third quarter of 2007.