Protection-Oriented Accumulation Focused Annuities Dominate 2020

Earlier in the week ThinkAdvisor’s, “Sales of Protection-Oriented U.S. Individual Annuities Continue to Rise.” article explains that protection-oriented annuity sales continue to increase in popularity while income-focused annuity sales dropped sharply.

While we certainly don’t argue ThinkAdvisor’s conclusion that Protection-oriented products continue to rise in popularity; however, after further analysis we are going to take it one step further.

According to LIMRA, total U.S. Individual Annuity Sales drop to $219 Billion, 9% off the $242 Billion turned in by the U.S Annuity Market in 2019. The effects of COVID-19 and ultra-low interest rates created a challenging environment for U.S. Insurers, particularly those with a high concentration of income-focused annuity sales as we’ll highlight later.

March 9, 2021, LIMRA press release summarized 2020 U.S. Annuity Sales into 3 categories highlighted below: 

  • Protection-Focused: $107 billion (Up from $104 billion)
  • Accumulation-Focused: $28 billion (Up from $27 billion)
  • Income-Focused: $60 billion (Down from $82 billion)

*Variable Annuities with a GMAB, RILAs, and fixed index annuities without GWLB‘s elected, and fixed-rate deferred annuities are included in the surveys’ Protection-Focused sales number.

2020 Index Annuity Sales Breakdown by Insurer

Fixed Index Annuity sales decreased from $73.5 Billion in 2019 to $55.5 Billion in 2020 amidst COVID-19 and a low-interest-rate environment. The below table lists the top 20 Fixed Index Annuity companies of 2020 along with their total sales number for the year.  

Best Index Annuity Companies

As the above table indicated Athene Annuity and Life Company were able to de-throne Allianz who has long been the index annuity industry leader. This accomplishment was 3 -years in the making. You can see in the table below that Allianz held the #1 spot for the past 4 years while Athene came in at #3 in 2016 and 2nd only to Allianz each of the last 3 years.

Let’s break down each of these companies leading index annuity products, rate projected returns based on historical performance to learn what led to Athene’s rise to the top.

Sales Down for every Top 10 2019 Index Annuity Company

2019 Top 10 Index Annuity Company Sales vs 2020 Index Annuity Sales

Bar chart showing 2019 top 10 fixed index annuity company's 2019 sales vs 2020 index annuity sales

Companies with Accumulation Focused Annuities the "So-Called Winners" of 2020

By analyzing LIMRA’s 2019 and 2020 SRI Fixed Annuity Breakout Results we are able to determine accumulation-focused protection-oriented annuity products were most popular in 2020. We compared the Top 20 Insurers in total U.S. Individual Fixed Index Annuity Sales for 2019 vs their corresponding sales numbers in 2020; as well as 3 new entrants into the Top 20.

The below table lists the top 10 Index Annuity Companies for 2020 along with their 2020 and 2019 Fixed Index Annuity sales. 

2020 RankAnnuity Company2020 Sales2019 SalesGain / Loss
1Athene$5,846,106$6,122,393 -4.50%
2Allianz Life$5,016,919$8,358,718 -40.00%
3AIG Companies$4,542,675$6,026,956 -24.60%
4Sammons Financial Companies$3,743,678NA
5Fidelity & Guaranty Life$3,458,10122.60%
6Global Atlantic$3,071,197$3,607,134 -14.90%
7Nationwide$2,935,700$5,455,800 -46.20%
8Security Benefit Life$2,882,395107.00%
9Great American$2,348,040$3,142,476 -25.30%
10American Equity$2,338,390$4,705,319 -50.30%

Athene was the number one seller of fixed index annuities in 2020 surpassing the long-standing leader Allianz Life of North America. As noted in the above table Allianz’s Index Annuity sales were down 40% from 2009 while Athene’s FIA sales dipped only 4% from their 2019 levels. 

Allianz Life saw their index annuity sales decrease by more than $3.3 billion year-over-year; that is more than the total sales of 2020’s 5th ranked insurer Global Atlantic. We wanted to know why and how such a drastic drop-off occurred.

2020 Annuity Sales Explained

A deeper dive into product offerings of the top index annuity companies shines further light on the types of annuity products that are popular among advisors and consumers in 2020. We began our evaluation by looking at Allianz Life since they have been the leader in index annuity sales for greater than a decade.

What we found is they do not offer an index annuity without a guaranteed benefits rider included. Allianz does not offer an accumulation-focused annuity product with principal protection. Upon further review, we found Allianz hasn’t had an accumulation-focused index annuity since the Signature 7 was retired a couple of years ago.

We used Annuities Genius Growth Analyzer to run historical backtests on all of Allianz’s currently available indexes and allocation options using current rates. Here is what we found:

Allianz Core Income 7 Annuity
1-Year Bloomberg US Dynamic Balance II ER PTP Participation
7 surrender yrs Rider fee: 1.25% Reset: Annual Bloomberg US Dynamic Balance II (ER)
6.30%7.09%4.84%
Allianz 360 Annuity
2-Year Bloomberg US Dynamic Balance II ER PTP Participation
10 surrender yrs Rider fee: 1.3% Reset: Biennial Bloomberg US Dynamic Balance II (ER)
6.09%7.09%4.53%
Allianz Core Income 7 Annuity
1-Year Bloomberg US Dynamic Balance II PTP Spread
7 surrender yrs Rider fee: 1.25% Reset: Annual Bloomberg US Dynamic Balance II
5.24%5.96%3.96%
Allianz 360 Annuity
2-Year PIMCO Tactical Balanced ER PTP Participation Rate
10 surrender yrs Rider fee: 1.3% Reset: Biennial PIMCO Tactical Balanced (ER)
4.90%6.00%4.33%

Allianz Core Income 7 Annuity
1-Year Bloomberg US Dynamic Balance II PTP Cap
7 surrender yrs Rider fee: 1.25% Reset: Annual Bloomberg US Dynamic Balance II

4.76%5.45%4.69%

While the average rate of return at first glance doesn’t appear to be too bad it is important to note each of these annuities also has a 1.30% mandatory rider fee that must be subtracted. In addition, the fee will further reduce these averages as it is deducted even in the years in which no interest is earned.

Athene’s products evaluated: In the table below you’ll find the backtested performance of Athene’s 3 top index allocation options and crediting strategies based on today’s rates using the Annuities Genius Historical Analyzer function. You’ll see Athene charges a 1.75% fee for these strategies but the fee purchases a higher participation rate, meaning the owner gets to participate in more of the index’s upside performance each year. 

The fact Athene offers riders focused on accumulation and protection is what propelled them to the #1 index annuity position for 2020, in our opinion.

IMPORTANT DISCLOSURE: The above information is provided solely as a comparison tool, and should be considered a supplement to the full information provided by the insurance company, if applicable. The information published at this web site is not intended to be a recommendation to purchase an annuity. Values listed here cannot be guaranteed. Please refer to each carrier’s complete product information before making a decision. You are strongly urged to consult with financial planning, tax, and legal advisors to determine if an annuity is suitable in your financial situation. Annuities are not deposits of or guaranteed by any bank and are not insured by the FDIC or any other agency of the U.S. government. All annuity guarantees are subject to the financial strength of the insurance company. All rates are subject to individual carrier approval.

About My Annuity Store, Inc.

My Annuity Store, Inc. is on a mission to transform the annuity market through its online annuity platform designed to provide independent, unbiased, and transparent annuity information and education. The Company offers a marketplace where users can purchase a fixed index annuity, traditional income annuities, and fixed annuities, all of which provide guaranteed return, principal protection, or guaranteed lifetime income. At My Annuity Store, consumers can freely access education content, quote information, and purchase fulfillment. They are a privately held corporation based in Fishers, Indiana.

About Allianz Life Insurance Company of North American

Allianz Life Insurance Company of North America, one of the FORTUNE 100 Best Companies to Work For® and one of the Ethisphere 2020 World’s Most Ethical Companies®, has been keeping its promises since 1896 by helping Americans achieve their retirement income and protection goals with a variety of annuity and life insurance products. In 2019, Allianz Life provided additional value to its policyholders via distributions of more than $10.4 billion. As a leading provider of fixed index annuities, Allianz Life is part of Allianz SE, a global leader in the financial services industry with over 147,000 employees in more than 70 countries. Allianz Life is a proud sponsor of Allianz Field® in St. Paul, Minnesota, home of Major League Soccer’s Minnesota United.

About Annuities Genius

Annuities Genius is a service of Agatha Global Tech LLC, a team with over 30 years of experience in the financial and insurance industries. We believe our internet software enables insurance organizations to increase productivity and reduce costs by directly connecting insurance companies, brokers, and retail consumers with insurance rates and benefits online, in real time.

About Athene

Athene, through its subsidiaries, is a leading retirement services company that issues, reinsures and acquires retirement savings products designed for the increasing number of individuals and institutions seeking to fund retirement needs. The products offered by Athene include: 

  • Retail fixed, fixed indexed and index-linked annuity products;
  • Reinsurance arrangements with third-party annuity providers; and
  • Institutional products, such as funding agreements and the assumption of pension risk transfer obligations.

Athene had total assets of $142.2 billion as of March 31, 2020. Athene’s principal subsidiaries include Athene Annuity & Life Assurance Company, a Delaware-domiciled insurance company, Athene Annuity and Life Company, an Iowa-domiciled insurance company, Athene Annuity & Life Assurance Company of New York, a New York domiciled insurance company and Athene Life Re Ltd., a Bermuda-domiciled reinsurer. For more information about Athene, please visit can www.athene.com

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