By avoiding gimmicky riders, benefit reductions and higher prices, Jackson National Life Insurance Co. reported its best year for annuity sales through banks in 2009.

"We heard a lot of skepticism," said Jack Mirshler, the western divisional vice president for the Lansing, Mich., unit of Prudential PLC of London. "We remained committed to our long-term approach. We weren't going to go out and create some hot product that would last for three months or do some fire sale on products. None of that made sense for our customers. We never wanted to be a company that chased market share with frivolous riders."

Jackson reported last week that annuity sales in the bank channel increased 23.1%, to $2.45 billion as variable annuity sales through banks increased 72.9%, to $1.3 billion last year. Barry Lowery, Jackson's eastern divisional vice president, said it had strong sales from its fixed index annuities and its variable annuities. He said Jackson had the top-selling variable annuity contract in the bank channel last year with its Perspective II variable annuity.

According to Limra International, sales of variable annuities declined 18%, to $127 billion last year. Many insurance companies are either furnishing wholesalers with inexpensive, scaled-back products or riskier, more expensive products with flamboyant riders. Industrywide, riders are drawing investors; according to Limra, guaranteed living benefits remained popular, with 84% of policyholders electing to buy those riders in the fourth quarter.

Lisa Plotnick, an analyst at Cerulli Associates in Boston, said that she expects "a new era of stabilization and rationalization." In short, insurers simply cannot afford to slip back into bad habits, aggressively pricing each other out of the market with increasingly elaborate riders, a strategy that failed them. "We expect them to do that," she said. Jackson has kept, and plans to continue to keep, prices steady on its variable annuities, Lowery said.

"Our wholesalers spend lot of time defending our price structure," he said. "We have competitors that charge 30% to 50% less for their riders and, frankly, it was difficult, especially in 2008. We gave up some market share because we determined that we didn't want to compete based on price. Long term we are convinced it was a smart philosophy. It is very important not to make pricing changes just for the sake of sales. Pricing changes have to make sense for Jackson, our clients and our parent company. We aren't interested in playing the shell game."

Mirshler said Jackson is confident that it designed a set of variable annuities for good and bad market conditions so it "didn't have to go out and make a slew of changes to draw advisers and clients."

"We saw in 2009 a real flight to quality," Mirshler said. "With our ratings, and the way we have remained committed to the things that we do on a daily basis, we have drawn more customers."

To maintain its momentum from last year, Jackson plans to work with wholesalers nationally to increase sales through banks. Mirshler said last year, as competitors told wholesalers to stay at home, Jackson increased sales by adding wholesalers. It now has 33 external wholesalers focused on selling through banks.

"We plan to keep showing up every day, and that will help us build adviser loyalty," he said. "If sales grow, we have the green light to add more wholesalers."

Some analysts said they expect fixed annuities to continue to grow this year, especially considering President Obama's support for such products. But as the nation emerges from the bear market, Lowery said, "many people are starting to look around for more."

"Interest rates are extremely low and the returns on CDs and fixed annuities are pretty low," he said. "People want the protection, but they also want some upside potential. Variable annuities offer both."

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