Annuity Sales Fall Slightly in 2nd Quarter
September 4, 2000
Nationwide Financial of Columbus, Ohio surpassed both American Skandia Life Assurance Corp. and Hartford Life Insurance Company in variable annuity sales in the second quarter of this year, with $2.408 billion in sales, according to the VARDS Report of Marietta, Ga.
Nationwide is now ranked fourth in sales for the first half of the year.
American Skandia of Shelton, Conn. had sales of $2.337 billion, narrowly trailing Hartford of Simsbury, Conn. with $2.373 billion. Only TIAA-CREF outsold Nationwide, with sales of $2.517 billion. American General Corporation of Houston ($1.996 billion) and Equitable Life Assurance Society of the U.S. of New York ($1.563 billion) ranked fifth and sixth, respectively. Total industry sales in the second quarter were $36.1 billion, a slight decline from first quarter sales of $36.4 billion, according to VARDS. The total for the first six months of the year, $72.5 billion, was up 82 percent from $59.3 billion in the first half of 1999. First half sales were 59 percent of the premium flow for all of last year, $122.6 billion, according to VARDS.
Nationwide's sales were $4.4 billion for the first six months of this year. Total sales for all of 1999 were less than $6.6 billion. Nationwide, with assets under management of $97 billion, attributes its strong sales to several product and service improvements.
Sub-account selection this year has contributed to the increase, according to Karen L. Eisenbach, vice president and variable annuity product manager for Nationwide. Seventeen of the sub-accounts in Nationwide's BEST OF AMERICA Future variable annuity posted gains last year of more than 20 percent, she said.
"We have a solid sub-account line-up which we have strengthened even more this year, with the addition of fund options from Janus, Oppenheimer, Morgan Stanley and Strong," Eisenbach said. Nationwide added three Janus funds, and one fund each from Morgan Stanley, Oppenheimer and Strong to its BEST OF AMERICA Future variable annuity. Eleven of the sub-accounts in the annuity were given four or five star Morningstar ratings as of June 30.
Nationwide also, in January, adopted a modular approach to the product which has received a positive response, Eisenbach said.
"This offers a wide variety of features, but we're giving customers the flexibility to add only those features that help them meet their retirement planning goals," Eisenbach said.
One new optional rider offers an immediate three percent credit on all purchases made during the first year. The 45 basis point rider fee for this option disappears after the contract's seventh year. Customers can now also buy a guaranteed minimum income benefit that assures them that annuity payments will never be less than the guaranteed value at the time of annuitization, according to Eisenbach. The minimum investment has been reduced to $1,000 from $15,000, with subsequent payments of $25. A free withdrawal and disability waiver has also been added which allows policyholders to withdraw an additional five percent of the sum of all purchase payments to the contract each year, without a surrender charge. The product also now carries a five-year contingent deferred sales charge instead of a seven-year charge.
Nationwide further increased the number of internal wholesalers supporting variable annuity sales from 41 to 75. The field wholesaler force was expanded 30 percent. Nationwide also established 24-hour telephone access for customers and producers for account information. It also added daily updates of sub-account values on its website.
TIAA-CREF of New York was first overall in the second quarter in sales through the independent, regional and wirehouse broker-dealer channels, according to VARDS. Yet American Skandia, with its mid-year sales ratio of 74.1 percent, remains the leader, substantially ahead of TIAA-CREF, with a 54.6 percent sales ratio, VARDS reported.
Variable annuity contracts sold by Nationwide, American Skandia, IDS of Minneapolis, Jackson National of Lansing, Mich., Fidelity of Boston, Allstate of Northbrook, Ill., Manulife of Toronto, MONY of New York and GE Life & Annuity of Richmond, Va. had sales ratios - first half 2000 sales to total 1999 sales - in excess of 70 percent, according to VARDS.