John Hancock Financial Services increased its variable annuity sales through banks by 28% in 2006 and aims to double variable sales through them every few years, the new president of its variable annuity business said.
"The secret to us growing by double digits over the next few years is our growth in the bank channel," said Marc Costantini, who started in the job Feb. 19.
Until recently the Boston company was better known to banks for its fixed annuities. That explains its "relatively small base and market share," Mr. Costantini said Wednesday.
Hartford Financial Services Group Inc., the longtime leader in variable annuity sales through banks, sold $4.81 billion of them through banks in 2006, a spokesman said.
Variable annuity sales through banks in 2006 were $23.2 billion, overall last year, according to the Kehrer-Jackson Monthly Bank Annuity Sales Survey.
Manulife Financial Corp.'s 2004 acquisition of Hancock gave the Toronto company instant, broad access to banks through the third-party marketer Essex Corp., which John Hancock bought in 1999.
"Overnight, the bank channel opened to the variable annuity manufacturing arm of Manulife," Mr. Costantini said.
Sales of Hancock variables through large brokerages and financial planners outpace their sales through banks. The company sells 12% of its variables through banks and has said it would like to increase that to 20% over the next two years.
Hancock has a "pretty good" chance to move up the ranks among bank variable annuity sellers, said Scott DeMonte, the founder of the rating-service operator Annuity IQ in Fayetteville, N.Y.
Hancock's "name is huge and their pricing model is extremely competitive throughout the marketplace," he said.
The easy-to-understand nature of Hancock's variables is another selling point with brokers and customers, Mr. DeMonte said.
Hancock attributed much of its success in variable annuities last year to its Principal Plus for Life rider, which promises guaranteed lifetime income that can increase depending on the performance of underlying investments.
Standard & Poor's upgraded Hancock's financial strength rating to AAA last year. Refinements to its product lineup included an expansion of its portfolio of optional withdrawal benefits.
Hancock added Wachovia Corp., Citizens Bank of Rhode Island, Commerce Bank of New Jersey, JPMorgan Chase, and Banco Popular as distributors last year, along with AmSouth, which subsequently merged with Regions Financial. Hancock now sells its products through 82 banks.
Bank consolidation is giving variable annuity providers more opportunities to gain premium shelf space, Mr. Costantini said.
"It is creating some distribution powerhouses that want to be able to offer a full suite of products to their customers in order to compete with financial planners and wire houses," he said.
Mr. Costantini said that 20%-25% of Hancock's wholesalers focus on banks. The percentage of annuity wholesalers will grow in tandem with banks' share of the company's variable sales, he said.
Overall, Hancock sold $9.1 billion of variable annuities in 2006, up from $7.9 billion in 2005, and revenue from variable annuity sales rose 24%. The company also strengthened its wire-house business by creating a distribution partnership with Morgan Stanley.
A Manulife veteran, Mr. Costantini was the chief financial officer of John Hancock Financial Services before being named president of the variable annuity business. The Montreal native succeeded Hugh McHaffie, who is now the president of John Hancock Wealth Management.
