Although many big variable annuity writers are fading from the market, New York Life Insurance Co. has decided to jump in with a new product as a strategy to gain favor with independent broker-dealers and registered investment advisers.
Although many big variable annuity writers are fading from the market, New York Life Insurance Co. has decided to jump in with a new product as a strategy to gain favor with independent broker-dealers and registered investment advisers.
“We were never a big variable annuity market player, but we're going to jump back in a big way,” Chris Blunt, executive vice president of the insurer's retirement income security division, said in an interview today.
“We're actively developing some new products, and we're talking to some broker-dealers about it.”
Though Mr. Blunt would not reveal specifics behind the new variable annuity the insurer has in the works, he noted that the new product would be a simplified one.
“The themes will be simplification, low cost and transparency,” he said.
The company will finalize the product's design over the next 30 days, with an anticipated release in about two months.
While the insurer has offered variable annuities — it sold $1.7 billion of the product in 2008 — most of those sales have been done through New York Life's agents.
The carrier never offered a guaranteed-minimum-income or guaranteed-minimum-withdrawal benefit with its variable annuities, which kept it from obtaining a strong foothold in the indie-broker-dealer channel back in the product's heyday.
However, now broker-dealers and RIAs are much more concerned about financial soundness, credit ratings and sensible pricing when they look at annuity writers, Mr. Blunt said.
New York Life has the highest ratings from all four major ratings agencies, according to the firm.
The roiling merger activity among RIAs and broker-dealers also presented the carrier with an opportunity.
“That's an added dynamic for all of us: How do you position a new product and concepts when your clients are in such flux?” Mr. Blunt asked.
“We're able to do that and add lots of new distribution and new relationships on the annuity side.”
The company has been courting broker-dealers over the last six months at the home office level, Mr. Blunt said.
Though analysts have pointed out that mutual carriers — such as New York Life — managed to escape the ratings and financial havoc that hit so many big insurance companies, because they largely eschewed the risk behind variable annuities, Mr. Blunt said, the insurer will be cautious in its initiative.
“Our entry is going to be selective in terms of the distributors we consider offering products to,” he said.
“We're never going to be a company that takes on excessive equity risk. We can build a reasonable product and manage the risk.”
Kicking off the new initiative, the carrier hired four variable annuity veterans this summer to come up with product development concepts.
Angela Kyle, now senior vice president and head of New York Life's individual-annuity department, came from TIAA-CREF of New York, where she was head of pension product management.
Nik Advani, most recently vice president of international business development at Genworth Financial Inc. in Richmond, Va., recently joined New York Life as a vice president in its individual-annuity department and is responsible for variable annuity product management.
Matt Grove, now a vice president in New York Life's retirement income security unit's third-party-distribution department, used to be senior vice president of business development at Jefferson National Life Insurance Co. in New York.
Finally, Matt D. Wion, now vice president and chief risk officer for the retirement income security segment, joined from Ernst & Young LLP in New York, where he was senior manager, insurance and actuarial advisory services.
