Insurance Companies

Genworth Financial is discontinuing sales of its variable annuity products. The company plans to stop the sale of any new variable annuity products by the end of the first quarter of 2011. Genworth has had an active presence in the variable annuity market as a top 20 U.S. company with $2.3 billion in sales in 2008. Genworth's exit leaves the U.S. variable annuity market increasingly concentrated with 5 insurance companies controlling 55 percent of the market. Genworth's decisions comes at a...

The ultra-low interest rates that exist at the moment are affecting insurance company profitability and operations. On the profitability side, current policy premiums must be reinvested into bonds that have low yields and are fully priced. Investment income and underwriting profitability (which is often rare) are the main components of insurance company profitability. As large fixed income investors, insurance companies are challenged in the current interest rate environment. On the operations...

Variable annuity sales in the United States increased 9.7 percent to total $34 billion during the third quarter of 2010. Variable annuity revenue figures continue to be concentrated among a handful of leading companies: Prudential Financial: $15.5 billion year to date. MetLife : $13.2 billion year to date. Jackson National Life: $10.47 billion year to date. TIAA-CREF : $10.42 billion year to date. Lincoln Financial : $6.6 billion. The total amount of variable annuity sales in the first 9 months...

Annuity persistency refers to whether people hold on to their existing annuity products or exchange them--typically through a Section 1035 exchange --for new products. Higher levels of persistency suggest that annuity owners are sticking with existing products which are likely more valuable than what would be available in the current market through an exchange.