Variable Annuity

In contrast to a fixed annuity, the key features of a variable annuity can fluctuate (they are “variable”) during the accumulation period and during the payout phase. Also in contrast to a fixed annuity, the variable annuity contract holder assumes much of the investment risk. With a variable annuity, the insurance company provides the contract holder with the ability to determine how his or her premiums are invested. One investment option is a variable account which typically consists of equity, bond or money market mutual funds. The other option is the general account of a variable annuity which provides a guaranteed return. The contract holder decides how much risk or variability they want to tolerate by allocating premium payments among the general and variable accounts. The amount of money accumulated and the amount of income during the payout phase are determined by the returns of these accounts. With a variable annuity: 1) the money can go in as a single premium payment or a series of payments; 2) the money is invested at a variable or non guaranteed rate; 3) payments are variable and can begin immediately or at some future date.

Product Changes Spur Variable Annuity Sales

U.S. variable annuity sales grew by 24 percent from the same period a year earlier. Variable annuity sales for the first quarter of 2011 totaled $38.9 billion. LIMRA reports that 16 of the top 20 variable annuity providers experienced sales growth relative to the previous year. Prudential led the industry with a 40 percent increase and $6.81 billion in variable annuity sales in the first quarter. Sales at MetLife increased 41 percent to $5.68 billion. The strong sales results are attributed in...
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Annuity Business Drives Earnings Momentum at MetLife and Prudential

Life insurance companies MetLife and Prudential Financial both reported quarterly earnings that exceeded analysts' estimates. MetLife reported record variable annuity sales and a sharp rise in its retirement product fees. Prudential also reported strength in its annuity business. While annuity sales were strong at both companies, higher hedging costs had an adverse impact on the reported earnings of MetLife and Prudential. Source: Reuters Full Story
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An Interview with Jack Marrion and John Olsen, Authors of Index Annuities: A Suitable Approach

Jack Marrion heads a research consultancy focused on the...

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Fidelity Variable Annuity Offering Reaches $1 Billion in Sales in First Year

Fidelity Investments recently announced that it reached $1 billion in sales with its MetLife Growth and Guaranteed Income ("MGGI") variable annuity product offering. The MetLife Growth and Guaranteed Income product has only been available since November 2009. The MGGI product is manufactured by MetLife and distributed exclusively by Fidelity. The MGGI product is a deferred variable annuity with a living benefit rider. The living benefit rider is a guaranteed lifetime withdrawal benefit ( GLWB...
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Genworth is Exiting the Variable Annuity Market

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...
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