Variable annuity players join the fixed indexed annuity fray
September 30, 2011 by Darla Mercado
John Hancock launches new product; Pac Life, Mass Mutual and
Hartford file with regulators
By Darla Mercado
September 29, 2011
Carriers that have been stalwarts in the variable annuity industry are trying
their hand at manufacturing and selling fixed indexed annuities.
John Hancock Annuities earlier this month launched its Inflation Guard
annuity, which credits a fixed interest rate during the first year, and a rate
pegged to the consumer price index-urban for subsequent years. Customers can
choose how long they’ll stay in the annuity, up to 10 years, according to a
prospectus filed with the Securities and Exchange Commission. But for now, only
the 10 year structure is available to clients, said Tom Mullen, chief marketing
officer at John Hancock Annuities. Surrender fees at their highest are 8% and
decline from there.
The insurer has labeled its product a registered market value adjusted
John Hancock joins Massachusetts Mutual Life Insurance Co., which filed its
New Elevations indexed annuity with state insurance regulators in May. A John
Hancock spokesman declined to comment. MassMutual is currently deciding on the
timing for launching its indexed annuity, said spokeswoman Patricia Norris
Pacific Life Insurance Co. and The Hartford Financial Services Inc. filed
indexed annuities with insurance regulators in June. Pacific Life spokesman
Tennyson Oyler declined to comment on the filing.
The Hartford withdrew its application in August, according to the Connecticut
Insurance Department, but the carrier can re-file and observers expect it to
launch an indexed annuity this fall.
The carrier’s spokesman, David Potter, declined to comment on the filing.
Given the carriers’ history in the variable annuity business, industry
experts expect the companies to target the same audience of registered reps at
broker-dealers. Currently, ING USA Annuity and Life Insurance Co., Jackson
National Life Insurance Co. and Lincoln National Corp. are the most popular
issuers of indexed annuities among registered reps.
But tapping that audience isn’t going to be easy, as the insurance companies
will have to change their tune to get the reps’ attention — especially in an
environment that’s traditionally been more open toward variable annuities rather
than indexed annuities.
“[Variable annuity wholesalers] have been selling against the indexed annuity
for so long, it’s hard to ratchet back and say that they’re not the enemy,” said
Jack Marrion, president of Advantage Compendium Ltd., an indexed annuity
Successfully marketing the product likely will require wholesalers and
carriers to rethink their marketing approach.
“It requires a different view of how to present the product,” said Mr.
Marrion. “Reps are used to presenting ‘return.’ This is ‘safety.’