Tax-advantaged investing gaining traction among advisers, helps push product.
Jackson National Life Insurance Co. enjoyed a bump in deposits and sales during the first quarter, thanks to its variable annuity that's free of generous living benefits.
The insurer scooped up a total of $6.2 billion in total sales and deposits during the quarter ended March 31, up 6.3% from the year-earlier period. Variable annuity sales helped boost flows into the carrier.
A sizable chunk of those sales came from Elite Access, a fairly new variable annuity that emphasizes tax-deferred growth and alternative investments rather than lifetime-income benefits. Elite Access, which has been around only since March 2012, had sales of $835.6 million during the first quarter of this year, up from $11.5 million during the comparable period last year.
The lion's share of VA sales came from sales of “other variable annuities” at Jackson, including its well-known Perspective II, totaling $3.7 billion in the first quarter. That's down from $4.4 billion in “other” variable annuities sold in the first three months of 2012.
“Our success is driven by the fact that advisers have embraced our three themes: access, guidance and control,” said Bill Burrow, senior vice president of national sales development at Jackson. “You have access to the variable annuity platform, a wide array of investment options. There are guidance portfolios for advisers who want support. Finally, in this environment, control is important as it pertains to taxes and the powerful tax advantages of the variable annuity.”
Today's harsher tax environment made the tax-deferred investing of annuities seem even more attractive.
“People are more sensitive to taxes, and the story of tax-advantaged investing is more compelling,” Mr. Burrow said.
Elite Access has a lower risk profile than the other Jackson VA offerings. With Elite Access, clients don't get the step-ups and bonuses that are costly for the insurer to provide when interest rates are low. Instead, the client is choosing from an array of 95 investment options and taking the brunt of the risk should markets not perform. The ability to accumulate tax-deferred earnings in the annuity contract is the real highlight of Elite Access.
Jackson also reported strong results in other product lines. Indexed-annuity sales reached $531.4 million in the first quarter, up from $381.7 million a year earlier. First-quarter fixed-annuity sales were down from last year, however, falling to $223.3 million, from $255.1 million.
Last year, the company was first in VA net flows, according to Morningstar Inc., and first in total annuity sales, with a market share of 10.2%, according to LIMRA. Jackson also was second in new sales of VAs, with a market share of 13.8%, according to Morningstar.
Indeed, the company's popularity in traditional VAs was almost too much of a good thing last year, considering the fact that market giants Prudential Financial Inc. and MetLife Inc. moved to de-emphasize variable annuities, reduce the richness of their products and step away from their risks. Jackson wound up next in line to collect flows that otherwise would have gone to its two largest competitors.
To soften the blow, Jackson took steps last November to halt inflows temporarily via Section 1035 contract exchanges. Steps to moderate flows continued this month, as the company raised the cost of its LifeGuard Freedom Flex guaranteed-minimum-withdrawal benefit and stopped offering step-ups to the highest quarterly contract value for the single-life version of Freedom Flex.
