Much has changed in the annuity world in recent months. Several carriers have exited the variable annuity business, while new channels of distribution have opened up for indexed annuities. Shadowing all these shifts is a tenacious low interest rate environment that has forced providers to alter their products to maintain profitability.
Right in the middle of all those gyrations is ING, which halted VA sales in 2009 while still maintaining its position as a top seller of fixed annuities and indexed annuities (according to LIMRA, it ranked in the top 20 sellers of fixed annuities at $1.5 billion in 2011).
We also focus on another segment of the market, which is the accumulation segment. There is still a large number of people sitting on a lot of cash, but don’t like interest rates today. People aren’t going into fixed products because they’re afraid that interest rates are going to rise. They don’t want to be locked in. We created an index benefit that uses LIBOR as the indictor. Most indexed annuities use the S&P 500 to determine how the performance is based. So we designed a strategy called “interest rate benchmark” so that if interest rates rise, we’re going to pay the client for that.
LHP: What product features are popular today? We hear a lot about lifetime income guarantees.