The Cerulli Report Annuities and Insurance 2015

Transcription

1 The Cerulli Report Annuities and Insurance 2015 Evolving Products for a Sustainable Industry NEW Interactive Data Supplement Overview & Methodology In its ninth iteration, this annual report examines the retail annuity and life insurance industries, emphasizing annuity distribution, product development, product positioning, and subadvisory asset management. Data for this report comes from several Cerulli surveys of and interviews with insurers, asset managers, advisors, national sales managers, key account managers, and wholesalers. Benefits - Assess new product development trends in the variable and fixedannuity markets - Develop a competitive sales and marketing strategy for both new and emergent channels - Understand variable annuity (VA) product distribution to advisors and investors - Examine changes in asset class demand in VA subadvisory Questions Answered - How great an opportunity do investment-only variable annuities present for asset managers? - Will nontraditional products continue to eat away at feature-rich VAs share? - Will fixed-indexed annuities enter the mainstream? - What impact will the shift to fixed products have on asset managers subadvisory business? - What asset classes are in demand from subadvisory sponsors? NEW Interactive Data Supplement Experience Cerulli s digital platform and interact with analyses from this report today With this report subscription, we re pleased to include these interactive dashboards: 1. Advisor Market Sizing Funnel: Understand the size of the advisorforce that sells annuity and insurance products. 2. Household Sentiment and Ownership of Annuities: Analyze the ownership of annuities by head of household age, household investable assets, and primary provider channel. 3. Insurers vs. Asset Managers: Review the number of advisors, total AUM, total VA assets, advisor fee revenue, and breakdown of client investable assets by advisor channel. LOOK INSIDE THIS REPORT 194 Pages, 138 Exhibits Subscription Information $17,000 Annual - Hardcopy - Digital copy in color - Unlimited online firm-wide access - Exhibits in Excel - Key findings - Online access to 15 related reports - Analyst support - NEW Interactive Data Supplement Research Included A subscription to this report remains active until the next iteration of this report releases and includes online access to the following related Cerulli research: Eight years of The Cerulli Report: Annuities and Insurance Variable Annuity Distribution Opportunities: Broadening Appeal and Attracting New Advisors Cerulli Special Report: Evaluating Your Variable Annuity Product Line Variable Annuity Asset Management: Growing Assets in a New Environment Wealth Transfer: Sizing Trends and Opportunities State of the Variable Insurance Industry: Strategic Implications for Asset Managers and Insurers Insurance Product Distribution Opportunities Retirement Income: Positioning for Success To Purchase CALL info@cerulli.com VISIT

2 New Cerulli interactive Data SupplemeNt Interact with select Cerulli Report analyses today What are Interactive Data Supplements? We are pleased to offer an interactive experience with select data contained in 2015 Cerulli Reports. This Interactive Data Supplement (IDS), allows you to interact with select exhibits in unique ways: NEW Interactive Data Supplement Access consolidated data from multiple report exhibits in a single comparative view Home in on specific data elements Build custom charts that are easily exported for presentations and other materials Apply customizable filters to Cerulli Report analyses including assets under management, net new flows, product type, channel, year, marketplace, and currency $120,000M $100,000M $80,000M EXPLORE FIRM: Select Firm YEAR: Q 2013 PROGRAM TYPE: Customize elements including currency, year, channel, etc. $60,000M $40,000M $20,000M $0M Q Q Q Q Q Q Q Q Q Q 2013 $140,000M $120,000M $100,000M $80,000M $60,000M $40,000M $20,000M 10% 5% 0% -5% (All) Mutual Fund Advisory Separate Accounts Rep as Portfolio Manager PROGRAM NAME: (All) Manager Select Model Wealth Portfolio Optimum Market Portfolio Personal Wealth Portfolio SAM (non-securities) SAM (securities) UVEST - CAA UVEST - NATCO UVEST - Vista Mgr Direct UVEST - Vista Wrap Rep as Portfolio Manager Separate Accounts Mutual Fund Advisory Assets Growth Rate View granular data Export exhibits the way you want them to look in Excel, PDF, or as an image $0M Q Q Q Q Q Q Q Q Q Q 2013 Source: Cerulli Associates Remember my changes How to Access IDS This new service is complimentary and is accessible via Cerulli Client Login. Simply access your firm s online Cerulli research with your unique login credentials and you will find the View Interactive Data Supplement link to this platform in My Reports. VIEW INTERACTIVE CHART You can also jump to the related IDS chart in the report by clicking on the View Interactive Chart button throughout the PDF. To obtain online access: Visit or contact our account management team: info@cerulli.com

3 Chapter 9 Wholesaling An Essential Component of the Supply Chain exhibit 9.09 Insurance Wholesalers: Services for Building Relationships with Advisors, 2015 Sources: Cerulli Associates, in partnership with Sequoia System International Analyst Note: Respondents indicating service is very important for building relationships. Service Life and Annuity Wholesalers All Wholesalers Sales ideas 79% 68% Best practices from other advisors 68% 61% Providing alternate approaches to challenges 58% 51% Educated competitive product information 53% 61% Practice management guidance 37% 32% Presentations at client events or seminars 32% 25% Educational whitepapers and thought leadership 26% 37% Assistance with advanced financial planning techniques 21% 22% Financial assistance for clients events or seminars 16% 27% Portfolio construction recommendations 16% 36% Entertainment and gifts 11% 12% Capital market commentary 11% 25% Access to portfolio managers or product specialists 11% 31% A high proportion of life and annuity wholesalers say sales ideas are very important in building relationships with advisors. Another important factor is the information wholesalers can provide about best sales practices. Key Implication: It seems that advisors crave information that can help them, thus it is essential for wholesalers to have insights at their fingertips. Cerulli argues that by sales ideas, advisors want ways to use the products that fit with specific client needs. Guidance on best practices is also in demand. This means that a wholesaler must have an ample network of seasoned advisors who freely share their experiences, and the wholesaler must remember anecdotes to share with other advisors. The idea of providing alternative approaches to challenges, which 58% of respondents say is valuable, is intriguing because it speaks to the ideas of best practices and problem solving. C A 136 the Cerulli Report Annuities and Insurance 2015

4 Expanded table of Contents table of CoNteNtS - Expanded Key Questions Answered Which variable annuity product type is the industry hoping will sustain sales most in the coming years? Are fixed-indexed annuities grabbing marketshare and mindshare away from variable annuities? What is looming as possibly the biggest challenge to variable annuity sales since the 2008 financial crisis? What are the top challenges regarding adoption of guaranteed income products within defined contribution plans? How can insurers make variable annuities more appealing to an increasingly sophisticated advisor population? Which variable fund types do asset managers think have the greatest growth potential?...19 Chapter 1: Bending, Not Breaking: the Big Picture Regarding Annuity Sales...20 An Industry In Transition...21 Living Benefits...22 Exhibit Annuity Sales, 2Q 2014 YTD vs. 2Q 2015 YTD...22 Exhibit MetLife Quarterly VA Sales and Benefit Changes, 3Q Q Risk Levers...24 Exhibit Jackson National Elite Access Sales (Total Flow), Q 2015 YTD...24 Exhibit Annuity Industry Product Evolution, E...25 The Annuity's Income Advantage Encountering Headwinds and Rivals...26 Exhibit Annuity Product Best Suited to Creating Retirement Income for Baby Boomers, Exhibit Insurers: Methods for Increasing the Number of Advisors Who Sell Variable Annuities, Recent Product Development...29 Exhibit Forethought Lifetime Spending Account GAWAs, 2Q Exhibit Investment-Only Variable Annuity Sales (Total Flow), Q 2015 YTD...31 Exhibit AXA Investment Edge 15.0 Protected Premium Death Benefit Rider Charge by Age, May Exhibit Insurer Perspective: Most Attractive Future Product and Distribution Opportunities, Exhibit Selected Fixed-Indexed Annuity GLWB Riders, The Outlook for VA Subadvisory Opportunities...39 Exhibit Asset Managers: Greatest Obstacle in Growing VA Subadvisory Business, Exhibit Growth and Availability of Variable Insurance Managed-Volatility Portfolios, 1Q Q VA Benefit Reinsurance Capacity Returning...41 Japan Wades Into the Space...41 Regulatory Issues...42 Exhibit Variable Annuity Total Flows as a Percent: Qualified vs. Nonqualified, Q 2015 YTD...42 Industry Outlook...44 the Cerulli Report Annuities and Insurance C A

5 table of Contents Expanded Chapter 2: Annuity Distribution overview...45 Exhibit Variable Annuity Total Flows, E...47 Exhibit Variable Annuity Net Sales as Percentage of New Sales, E...48 Exhibit Projected Variable Annuity Industry New and Net Sales, E...49 Exhibit Top-25 Variable Annuity Issuers by Sales, Q 2015 YTD...50 Exhibit Total Annuity Industry Sales by Distribution Channel, Exhibit Sales of Annuity Product Type, E...52 Exhibit Variable Annuity Total Flows by Distribution Channel, E...53 Exhibit Variable Annuity Total Sales by Distribution Channel Cerulli View, Exhibit Insurance Company Projected Change in Variable Annuity Sales by Channel, 2014 vs. 2017E...55 Chapter 3: Annuity Business opportunities and obstacles...56 Exhibit Insurer Perspective: Greatest Obstacle in Variable Annuity Business, Exhibit Insurer Perspective: Most Attractive Future Product and Distribution Opportunities, Exhibit Anticipated Availability of Living Benefits in the Next Three Years, Exhibit Methods Used by Insurers to Manage Risks Associated with Guarantees, Exhibit Investment-Only Variable Annuity Sales (Total Flow), Q 2015 YTD...62 Exhibit Insurer Perspective: Most Important Features in an Investment-Only VA, Exhibit Top Challenges Regarding the Adoption of Guaranteed Income Products within Defined Contribution Plans, Exhibit I-Share Class Variable Annuity Sales (Total Flow), Q Chapter 4: Variable Annuity Products...66 Exhibit Variable Annuity Industry Assets and Growth, E...68 Exhibit Projected Variable Annuity Industry Assets and Growth (including TIAA-CREF), E...69 Exhibit Top-25 Variable Annuity Issuers by Assets, Q Exhibit Top-25 Variable Annuity Contracts by Sales, Q 2015 YTD...71 Exhibit Variable Annuity Total Flows by Share Class, Q 2015 YTD...72 Exhibit Part 1. Channel Sales by Share Class Databank, Q 2015 YTD...73 Exhibit Part 2. Channel Sales by Share Class Databank, Q 2015 YTD...74 Exhibit Variable Annuity Assets by Share Class, Q Exhibit Variable Annuity Fixed Account Assets, Q Chapter 5: Fixed and Fixed-Indexed Annuities...77 Exhibit Fixed Annuity Sales, Exhibit Fixed Annuity Sales by Product Type, Exhibit Fixed Annuity Sales by Distribution Channel, Exhibit Fixed-Indexed Annuity Sales, Exhibit Fixed-Indexed Annuity Sales as Percentage of Total Fixed Annuity Sales, Exhibit Insurance Companies: Factors Driving Growth of Fixed-Indexed Annuity Sales, Exhibit Fixed Annuity Industry Assets and Growth, Exhibit Top-20 Individual Fixed Annuity Issuers by Sales, Exhibit Expected Fixed-Indexed Annuity Sales Growth, Exhibit Importance of Wholesaler Support to the Fixed-Indexed Annuity Sales Process, C A 8 the Cerulli Report Annuities and Insurance 2015

6 Expanded table of Contents Chapter 6: life Insurance Products...89 Exhibit Life Insurance Sales Growth Rates, Exhibit Variable Universal Life and Variable Life Insurance Net Sales, Variable Subaccounts Only, Q 2015 YTD...92 Exhibit Variable Universal Life and Variable Life Insurance Net Flows Attributable to Top-10 Sellers, Variable Subaccounts Only, Q 2015 YTD...93 Exhibit Largest and Top-Selling Variable Universal Life and Variable Life Insurance Providers, Variable Subaccounts Only, 2Q 2015 YTD...94 Exhibit Household Ownership of Insurance Products by Investable Assets, Exhibit Household Ownership of Insurance Products by Primary Provider Channel and Age Range, Exhibit Consumer Confidence in Ability to Pay for Long-Term Care Expenses, Chapter 7: Distribution Channel overview...98 Exhibit Intermediary Matrix, Exhibit Top-25 Broker/Dealer Networks by Advisor Headcount, Exhibit Assets by Channel, Exhibit Bank Broker/Dealer Variable Annuity Scorecard, Exhibit Independent Broker/Dealer Variable Annuity Scorecard, Exhibit Insurance Broker/Dealer Variable Annuity Scorecard, Exhibit Regional Broker/Dealer Variable Annuity Scorecard, Exhibit Wirehouse Variable Annuity Scorecard, Exhibit RIA Variable Annuity Scorecard, Chapter 8: Advisor Annuity Use in Practices and Retirement Planning Exhibit Advisor Market Sizing Funnel, Exhibit Advisors Licensed to Sell Variable Annuity Products by Channel, Exhibit Advisors Currently Holding Annuities by Channel, Exhibit Active Annuity Sellers by Tier, Exhibit Variable Annuity Sales, Exhibit Variable Annuity Contracts by Channel, Exhibit Marginal VA Sales, Exhibit Insurers: Methods for Increasing the Number of Advisors Who Sell Variable Annuities, Exhibit Advisors' Unsolicited Client Product Requests, 2014 vs Exhibit Advisor Use of Retirement Income Products and Strategies by Channel, Exhibit Obstacles to Providing Retirement Income Advice by Channel, Exhibit Important Factors When Investing in an Annuity by Channel, Exhibit Important Factors When Selecting a Variable Annuity Provider by Channel, Exhibit Variable Annuity Methods for Funding Retirement Income, Exhibit Attractiveness of Emerging Annuity Designs by Channel, the Cerulli Report Annuities and Insurance C A

7 table of Contents Expanded Chapter 9: Wholesaling An essential Component of the Supply Chain Exhibit Insurance Company Sales Headcount by Product Line and Role, Exhibit Average Variable Annuity Sales per External Wholesaler, Exhibit Insurance Wholesalers: Territory Size, Exhibit Insurance Wholesalers: Time Allocation, Exhibit Insurance Wholesalers: Number of Annual Contacts by Advisor Type, Exhibit Insurance Wholesalers: Advisor Profiling Metrics, Exhibit Insurance Wholesalers: Sources of Advisor Prospects, Exhibit Insurance Wholesalers: Tools for Building Relationships with Advisors, Exhibit Insurance Wholesalers: Services for Building Relationships with Advisors, Exhibit Insurance Wholesalers: Desired Key Accounts Support, Exhibit Insurance Wholesalers: CRM Satisfaction, Exhibit Insurance Wholesalers: Desired Areas for Communication Improvement, Chapter 10: Investors and Annuities Exhibit Greatest Economic Concern by Investable Assets, Exhibit Retirement Households' Top Concerns and Most Important Financial Goal Databank, Exhibit Households That Have a Formal Retirement Income Plan by Age Range, Exhibit Percent of Households by Age with Formal Retirement Income Plan Databank, Exhibit Retirement Households' Income Sources by Age Range, Exhibit Retirement Households' Income Sources Databank, Exhibit Households' Desired Features of Retirement Income Plans by Investable Assets, Exhibit Ownership of Annuity Products Databank, Exhibit Household Opinion of Annuities, Exhibit Household Opinion of Annuities Databank, Exhibit Annuity Product Best Suited to Creating Retirement Income for Baby Boomers, Exhibit Reason Household Purchased a Variable Annuity by Investable Assets and Primary Provider Channel, Exhibit Reason Household Purchased a Variable Annuity Databank, Chapter 11: Variable Insurance Asset Management Strategy Exhibit Asset Managers: Obstacles to Growing VA Subadvisory Business, Exhibit Asset Managers: Expected Change in Number of Insurance Sponsor Relationships, Exhibit Asset Managers: VA Subadvisory Salesforce and Marketing Headcount by Functional Role, Exhibit Additional Distribution Channels Covered by VA Subadvisory Wholesalers, Exhibit Communication Strategies to VA Distribution Firms and Advisors, Exhibit Asset Managers vs. Insurers: Investment Styles with Greatest Potential for Growth, Chapter 12: Variable Insurance Asset Manager overview Exhibit Definitions and Implications of Variable Insurance Assets and Structure, Exhibit Variable Annuity Assets by Structure and Distribution, Q Exhibit Top-25 Variable Insurance Asset Managers, 2Q Exhibit Top-25 Selling Variable Insurance Funds, 2Q Exhibit Total Subadvised Variable Insurance Assets and Flows, Q 2015 YTD Exhibit Annual Turnover of Subadvised Variable Insurance Funds and Assets, C A 10 the Cerulli Report Annuities and Insurance 2015

8 Expanded table of Contents Exhibit Top-10 Subadvisory Variable Insurance Asset Managers, 2Q Exhibit Top-10 Unaffiliated Subadvisory Variable Insurance Asset Managers, 2Q Exhibit Top-10 Subadvised Variable Insurance AUM by Insurer, 2Q Exhibit Top-10 Subadvised Variable Insurance AUM with Unaffiliated Subadvisors by Insurer, 2Q Exhibit Variable Insurance Trust Assets and Net Flows, Q 2015 YTD Exhibit Top-25 Variable Insurance Trusts by Marketshare, 2Q Exhibit Fastest-Growing Variable Insurance Fund Managers by 3-Year CAGR, Exhibit Variable Annuity Asset Marketshare by Structure, Distribution, and Manager Type, Q Exhibit Percentage of Variable Annuity Assets by Asset Class, Q Exhibit Percentage of Variable Annuity Assets by Asset Class and Manager Type, 2Q Exhibit Passively Managed Variable Annuity Fund Assets and Net Flows, Q 2015 YTD Exhibit Top-10 Managers of Passively Managed Variable Annuity Funds by Assets, 2Q Exhibit Alternative Variable Insurance Fund Assets and Flows, Q 2015 YTD Exhibit Top-10 Alternative Variable Insurance Funds by Assets, 2Q Chapter 13: Risk Management in Variable Insurance Asset Management Exhibit Number of Investment Options Qualified for Primary Living Benefit Options, Exhibit Living Benefit Fund-of-Funds Managers, Exhibit Asset Managers: VA Subadvisory and VIT AUM Attributable to VA Asset Allocation Models or Fund of Funds, Exhibit Variable Insurance Embedded-Advice Fund Assets and Net Sales, Q 2015 YTD Exhibit Variable Insurance Embedded-Advice Fund Assets and Net Sales as Percentage of Variable Insurance Industry Total, Q 2015 YTD Exhibit General Account Total Invested Assets and Projections Insurance Business Line, E Index of Companies the Cerulli Report Annuities and Insurance C A

9 Aegon/Transamerica... 24, 46, 173, 182 AIG (SunAmerica) , 172 Alerian AllianceBernstein Allianz... 24, 34, 35, 82, 86 American Equity... 35, 36, 86 American General Americo Financial Ameriprise... 99, 167, 187 Artisan Partners AXA... 27, 32, 67 Ballie Gifford Brookfield Asset Management Capital Group/American Funds... 28, 163, 167, 176 Columbia Funds , 168 Curian Capital... 40, 163 Dai-Ichi Life Delaware Direxion DoubleLine Edward Jones... 72, 101, 106 Fidelity... 53, 167, 168, 176, 187 First Investors Life Genworth Great American Great-West Guggenheim... 33, 46 HCC Insurance Holdings Hartford... 37, 185, 192 ING Integrity... 82, 162 J.P. Morgan Jackson National... 13, 14, 24, 26, 29, 40, 45, 46, 50, 63, 70, 71, 128, 163, 171, 173, 177, 184 Lincoln National... 36, 41, 50, 140, 163, 182 LPL... 43, 101 M Financial MassMutual... 33, 172 Meiji Yasuda Life Company Index the Cerulli Report Annuities and Insurance C A

10 Company Index Mellon Capital Management Merrill Lynch... 84, 101 MetLife... 13, 23, 24, 26, 30, 36, 37, 45, 48, 50, 70, 94, 169, 173, 174, 177, 184 Milliman Morgan Stanley Nationwide... 33, 35, 43, 82, 177 Natixis Neuberger Berman New York Life... 36, 37, 52 North American Life Northwestern Mutual... 36, 38, 94 Ohio National Pacific Life... 36, 76, 92, 94, 173 PIMCO... 13, 167, 171, 172 Principal Financial Protective Life... 41, 48 Prudential... 24, 27, 41, 45, 48, 50, 70, 94, 169, 173, 184 Raymond James Rydex Schroders Security Benefit Life StanCorp Financial State Street (SSgA) Sumitomo Life Sun Life... 46, 185 Symetra... 41, 82 T. Rowe Price , 171, 172 TIAA-CREF... 26, 50 Thrivent Financial Tokio Marine Holdings Transamerica... 24, 46 Union Hamilton ValMark Vanguard... 28, 177, 182 Voya Financial (ING)... 33, 43, 44, 86, 99, 107, 127, 185 Wellington , 172 Wells Fargo... 41, 84, 101 Westchester C A 194 the Cerulli Report Annuities and Insurance 2015