EVANSTON, Ill., March 3, 2006 (PRIMEZONE) -- MasterDex, an indexed annuity issued by Allianz Life Insurance Company of North America(1), was the quarter's top-selling product in the Beacon Research Fixed Annuity Premium Study for the sixth consecutive period. Four book value products -- New York Life's LifeStages/MainStay Single Premium Fixed Annuity(2), Allstate Financial's (NYSE:ALL) Preferred Performance, John Hancock's (NYSE:MFC) GPA Plus, and Genworth Financial's (NYSE:GNW) SecureLiving(sm) Advantage -- were numbers two, three, four and five, respectively. Fourth quarter results include sales of some 188 products and 49 insurance companies.
Rank Company Name Product Name Product Type
1 Allianz MasterDex Indexed
2 New York Life LifeStages/MainStay
Single Premium Fixed
Annuity Book Value
3 Allstate Financial Preferred Performance Book Value
4 John Hancock GPA Plus Book Value
5 Genworth Financial SecureLiving(sm) Advantage Book Value
Three of the five top products overall also led sales in a distribution channel, with the Allianz Life MasterDex tops among independent producers, New York Life's MainStay Single Premium Fixed Annuity the bank channel leader and John Hancock's GPA Plus leading sales among independent broker-dealers(4). The best seller among captive agents was New York Life's LifeStages Lifetime Income Annuity. Hartford Life's (NYSE:HIG) CRC was the top selling annuity in the large/regional broker-dealer channel. Allstate's Choice Rate was the best-seller among wirehouses(3).
Channel Company Product Product Type
Banks and S&Ls New York Life MainStay Single Book Value
Premium Fixed
Annuity
Captive Agents New York Life LifeStages
Lifetime Immediate
Income Annuity
Independent
Producers Allianz MasterDex Indexed
Independent
Broker-Dealers(4) John Hancock GPA Plus Book Value
Large/Regional
Broker-Dealers Hartford Life CRC MVA
Wirehouses Allstate Financial Choice Rate MVA
By product type, Hartford Life's CRC was fourth quarter's best-selling market-value adjusted (MVA) product. The leading immediate annuity was New York Life's LifeStages/MainStay Lifetime Income Annuity.
The yield curve continued to flatten in fourth quarter as short term interest rates rose while longer term rates held steady. This ordinarily would stimulate an increase in sales of products with one-year interest guarantee periods (IGPs) relative to longer IGPs. However, one-year IGPs held a slightly less dominant share of fixed annuity sales compared to third quarter, 2005. The one-year IGP accounted for 85.7% of book value sales, down from 87.9% in the previous quarter. In terms of MVA sales, the shift was similar. The one-year IGP's share was 38.7%, down from 42.8% in third quarter.
Compared to the previous quarter, fixed annuity sales were down 5.4%, driven mainly by a 9.4% decrease in indexed annuity sales. Sales dropped 18.1% compared to fourth quarter, 2005. There was a less dramatic decline on a year-on-year basis. Relative to 2004, fixed annuity sales dropped 11.15% in 2005.
"These declines in fixed annuity sales were due primarily to the interest rate environment that prevailed during 2005, and especially in fourth quarter," said Jeremy Alexander, CEO of Beacon Research. "Short term rates rose relative to long term rates, resulting in an increasingly flat yield curve. When there is a normal yield curve, insurers can give fixed annuities a competitive rate advantage by investing in longer term fixed income securities to back annuities with shorter rate terms. This generally was not possible during 2005. Rising rates also put fixed annuities at a temporary disadvantage because their credited rates tend to lag Treasuries and CDs by at least a month."
About the Beacon Research Fixed Annuity Premium Study
The quarterly Study is the first to track and analyze product-level fixed annuity sales on an ongoing basis. It features commentary by Milliman USA, a leading actuarial consulting firm recognized for its annuity expertise. Combining Beacon's capabilities in fixed annuity information with Milliman's knowledge and analytic skills, the Study provides timely market intelligence of the highest quality. It's designed to report what's moving in each channel and why. The rapid growth in Study participation is testimony to the need for this information.
About Beacon Research
Beacon Research is an independent research organization founded in 1997. It compiles market intelligence on fixed annuity products for subscribers to its web-based systems at www.annuitynexus.com. Carriers access these systems to support product development, rate setting and competition research. Distributors use them for product analysis and selection. The new AnnuityNexus Sales Support System is an important resource for retention teams and sales desk staff throughout the distribution chain. Beacon also licenses information and software tools to other platforms, including websites for sales representatives and AnnuityNet's annuity automation platform. Beacon's fixed annuity benchmark series -- the industry's first -- is available through Ibbotson Associates. Directly and through strategic alliances, Beacon information can be accessed by hundreds of financial institutions and distributors.
(1) Allianz Life Insurance Company of North America is a subsidiary
of Allianz AG (NYSE:AZ).
(2) New York Life products sold by career agents carry the LifeStages
brand name while those sold through other channels carry the
MainStay brand name.
(3) Number of products for which sales were reported per channel:
Banks and S&Ls - 60; Captive Agents - 82; Independent Producers
- 87; Independent Broker-Dealers - 31; Large/Regional
Broker-Dealers - 33; Wirehouses - 8.
(4) Due to a distribution channel redefinition, John Hancock's
independent broker-dealer sales include revenue formerly reported
as captive agent channel sales.
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