Displaying items by tag: annuities

Morningstar recently announced that it has launched an Annuity Intelligence Center for advisors to compare and manage annuities for their clients. Sales of annuities have been booming due to higher interest rates and increased demand for retirement income. The Annuity Intelligence Center aims to simplify annuity sales and management for advisors by offering a comparison tool, educational material, and product accessibility. The platform is a partnership between Morningstar and Luma Financial Technologies, an Ohio-based fintech company with a platform for broker-dealer firms to buy and sell annuities, long-term investment options issued by insurance companies, and alternative investments. The Annuity Intelligence Center is designed for retail annuity sales and management but does not include in-plan annuities for workplace-sponsored plans. While retail annuity sales have been flourishing, in-plan annuity sales have been lagging. Jeff Schwantz, global head of channel partnerships at Morningstar, said the following in a press release, “Assets in annuities are climbing, and while these vehicles are growing in popularity, the annuity marketplace remains opaque, and advisers serving investors have difficulty evaluating their options.”

Finsum:Morningstar is looking to take advantage of a booming retail annuity market with the launch of a platform for advisors to compare and manage annuities for their clients.

While many states are rushing to adopt an annuity sales rule revision, there are still some that are using the National Association of Insurance Commissioners (NAIC) old sales rules and are not likely to move to the new version anytime soon. The NAIC adopted the Suitability in Annuity Transactions Model Regulation in 2010. The model required annuity sellers to verify that the annuities sold to consumers suit those consumers’ needs. In 2019, the SEC adopted Regulation Best Interest, which requires annuity sellers to document that they have acted in the best interests of annuity clients, rather than putting their interests first. The NAIC then adopted suitability model changes that were based on the SEC’s Reg BI standard in 2020. This has resulted in state officials that support Reg BI and those that oppose Reg BI. The states that haven’t moved to the new model are considered gray zones due to a map created that reflects the NAIC’s understanding of state adoption efforts. The states colored gray on that map indicates that they are far from implementing the NAIC’s 2020 suitability model changes. They include larger states such as California and Florida as well as smaller states such as New Hampshire and Vermont. The NAIC’s Annuity Suitability Working Group presented the implementation map Wednesday at the NAIC’s fall national meeting

Finsum:The NAIC updated its suitability model for annuity sales based on the SEC’s Reg BI, but several states are nowhere near close to adopting the new model.

Registered index-linked annuities (RILA) are currently the fastest-growing variable annuity in the industry due to their downside limits and upside crediting formula. Now that the Senate unanimously passed legislation to make it easier for the industry to register new products, RILAs should see even more growth. The legislation directs the SEC to issue a new form that replaces the IPO paperwork annuity issuers are currently required to use for RILAs. With the passage of the Senate bill, insurers filing for RILAs would be able to forgo the requirement that they disclose financial information using generally accepted accounting principles (GAAP). This will make it easier for insurers since GAAP is something they typically don’t use. Sales of RILAs for the first half of the year came in at $20.4 billion, a 6% jump from 2021. According to the insurance industry trade group Limra, the product now makes up 40% of overall variable annuity sales. Inflation and market volatility have made the RILA product attractive to investors due to its loss protection features and potential for upside growth.

Finsum: Registered index-linked annuities, which are already the fastest-growing variable annuity, should see even more growth as the Senate passed legislation that makes it easier to register them.

According to Wink’s Sales & Market Report, third-quarter sales of deferred annuities soared almost 21% over the prior-year quarter. Deferred annuities include variable annuities, structured annuities, indexed annuities, traditional fixed annuities, and multi-year guaranteed annuities (MYGA). Indexed annuities saw the largest gains. Sheryl Moore, CEO of Wink, Inc. and Moore Market Intelligence said that "It was a record-setting quarter for indexed annuity sales. In fact, 2022 will be a record year for indexed annuities as well." Total non-variable deferred annuity sales, which include indexed annuities, traditional fixed annuities, and MYGAs, came in at $48.8 billion for the quarter, up 67.1% compared to the prior year's quarter. However, variable deferred annuities, which include structured annuities and variable annuity product lines, did not see the same gains. While sales came in at $23.5 billion, that figure was down 10.8% compared to the previous quarter and down more than 23% compared to the same quarter last year. The No. 1 selling deferred annuity for the quarter was Jackson National’s Perspective II Flexible Premium Variable & Fixed Deferred Annuity. 

Finsum:With indexed annuity sales leading the way, total deferred annuity sales soared year over year. 

A form reviewer at the Securities and Exchange Commission recently said he wants to make sure life insurers give investors a clear picture of how their registered index-linked annuity (RILA) contracts work. RILAs are annuity contracts that can expose the holder to the risk of investment-related loss of principal, but that tie crediting rates at least partly to the performance of investment indexes, rather than to the performance of funds that resemble mutual funds. At the Life Insurance Products Conference, held recently in Washington, D.C., Michael Kosoff, an attorney on the staff of the SEC’s Division of Investment Management, stated that he wants one strategy to be available throughout the life of the contract. He also wants to require issuers to disclose maximum losses. Essentially, the SEC wants life insurance company clients to say which crediting strategy the clients' guarantee will be available for the life of a RILA contract. A crediting strategy includes a reference to a particular index such as the S&P 500. Kosoff’s concern is that many issuers have a provision stating, “After the first year, we can terminate any and all options currently available. So, in essence, after year one, investors have no idea what they’re getting.”

Finsum:Due toconcerns over changing crediting changes in registered index-linked annuities, an SEC form reviewer stated that he wants one strategy to be available throughout the life of the contract.