Coming off a year in which annuity sales plummeted at Shelton, Conn.-based American Skandia Inc., the company is looking for a new national sales director, according to an internal company memo.
The memo also announced the resignation Wednesday of Bayard F. Tracy as the sales director, effective immediately, said Marianne V. Stochmal, a spokeswoman for American Skandia.
Sources familiar with the situation, who declined to be named, said Mr. Tracy was taking the fall for an abysmal year in variable annuity sales.
Wade Dokken, the company's CEO, is to conduct the search for Mr. Tracy's successor, which will include internal candidates, the company memo said.
Through the bank channel, American Skandia had by far the biggest percentage sales drop of any annuity provider last year. It sold $306 million worth, a 66% drop, according to Kenneth Kehrer Associates' periodic study of annuity sales through banks. No other company among the 34 surveyed by the Princeton, N.J., consulting firm, fell more than 36% in total annuity sales.
But consultants said American Skandia's problems go far beyond its sales operation.
"They were a company that had a broad array of investment choices in their variable annuities, maybe the broadest of all," said Kenneth Kehrer, the president of the bank-insurance consulting firm. "Among the broad choices, they had some hot funds, like high-tech and telecommunications funds. Those were the hardest-hit, and that probably shell-shocked brokers."
Consequently, he said, many bank brokers probably passed on selling American Skandia variable annuities last year.
"Some of the other big variable annuity providers, like Nationwide and Hartford, had less of a choice in their annuities, but the investments were generally more conservative, and investors didn't get hit as much," Mr. Kehrer said.
Another problem with Skandia's bank sales was a lack of diversity in its product line, according to Michael White, the president of Michael White Associates, a consulting firm in Radnor, Pa.
"They are ill-equipped, not having fixed annuities for this type of environment we are in right now," Mr. White said. Since entering the marketplace, he added, all Skandia has done is promote variable annuities, and that's a mistake.
"They didn't even want to have a fixed bucket," Mr. White said. "Having fixed annuities is an act of self-preservation in a down market."
"A down market" could be understating how poorly variable annuities sold through banks last year. While fixed annuities raced to record sales of $27.4 billion, a 78% increase from 2000, variable annuities crashed, according to the Kehrer study. Variable annuities slipped to $10.9 billion, a 26% drop from 2000. American Skandia does not offer fixed annuities through banks.
Mr. Tracy, 54, reached at home Thursday, declined to comment. Skandia hired him to launch bank distribution of variable annuities in 1990, and he was promoted in 1996 to director of sales for all channels. Before joining American Skandia, he was a commercial banker at the old Connecticut Bank and Trust.
On his watch, American Skandia made many proprietary annuity agreements with large financial institutions, including what was then Fleet Financial Group, in 1993, and Wells Fargo & Co., a year later.
