Jackson National Life reported variable annuity sales through banks rose in the first six months of 2004 and though fixed sales fell from the year earlier they were up compared with more recent results.
The company's results were better than the industry's in both product lines.
The report reflects some recent industry trends, said Brad Powell, the president of the institutional market group at Jackson National in Lansing, Mich., "which I think is a positive for the bank investment sales industry." Mr. Powell's unit markets the company's products through financial institutions,
Its overall annuity sales through banks were $1.08 billion, the company said, up 19% from the first half of 2003. Sales of traditional fixed annuities were $663 million, down 4% from the year earlier but up 70% from the second half of 2003. Equity index annuities - which the company calls "fixed index annuities" - more than quadrupled sales volume in the first half, to $76 million, compared with the year earlier.
Variable annuity sales were $250 million, up 23%. The remainder of the sales were in products like immediate annuities.
In May Jackson National introduced a proprietary variable annuity for Fifth Third Securities, one if its bank customers, which "continues to gain steam," Mr. Powell said. The insurer has also seen a lot of interest in its turnkey marketing programs, he said, helping banks such as Citizens in Flint, Mich., sell more of both fixed and variable annuities on the bank platform.
One part of that program is the Variable Annuity Sales System, which trains branch employees to sell variable products.
The program "is being very well received as far as taking the platform sales force to the next level," Mr. Powell said, referring to the fact that many banks have had fixed annuities on the platform for years but need training and support to get employees involved in selling additional products.
Preliminary industrywide figures from Kenneth Kehrer Associates in Princeton, N.J., show that fixed annuity sales dropped 8.5% in the first half, to $15.1 billion, and that variables fell 8.2%, to $8.45 billion, compared with the year earlier.
Compared with the second half of last year, fixed sales were down 15%, and variables were up 17%.
In examining these results it is important to note that "the first half of last year was awesome, record-setting quarters," said Kenneth Kehrer, the president of Kehrer Associates, in part because minimum rate guarantees on fixed annuities made them more attractive than other fixed investments and a stock market rally also attracted investors to variable annuities.
Mr. Powell said the recent surge in popularity of equity index annuities is due to "the ability to have some upside potential with guarantees on the downside."
Mr. Kehrer said the products attract variable annuity buyers who are looking for more guarantees in a fluctuating environment. "This has elements of a fixed and elements of a variable annuity," he said. "It is also an interesting product for these times" because investors are unsure whether the market will rebound or drop further.
He also pointed out that broker-dealers are currently under "tremendous regulatory pressure" in connection with variable annuity sales as who these products are sold to and why are scrutinized. Equity index annuities appeal to a similar market but are not facing such scrutiny, he said.
