RJ and Makay

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A relatively small percentage of financial advisors sell 12 or more variable annuity (VA) contracts per year, and those advisors make a substantial majority of total VA sales, according to Cerulli Associates, Inc.  A recent annuities and insurance report by the Boston-based research firm found that only 18% of financial advisors annually sell 12 or more VA contracts, and that those advisors account for 68% of total annual VA sales.

Midsize variable annuity (VA) writers like John Hancock, Lincoln, and Transamerica should give the big boys — Prudential, MetLife, and Jackson National — a run for their money in this year's race for VA market share. Competition is heating up as new VA filings are prepped for May, the month most insurers give updated prospectuses to the Securities and Exchange Commission.

“On balance, the variable annuities market is getting right back into the features arms race from 2004 to 2007,” says Randy Binner, senior vice president and senior analyst with FBR Capital Markets Corp. His report, “2011 Channel Checks: VA, Life, Indexed Annuity Outlooks Positive, Fixed Annuity and LTC Outlooks Weak,” was released last week.

With the recession and bear market still fresh in their minds, Americans are increasingly opting for savings vehicles with safety features such as a guaranteed income stream in retirement. Their need for more security has pushed demand for annuity products, especially variable annuities, to record highs.

For example, fourth-quarter variable annuity sales totaled $37.6 billion, a 10% increase from the previous quarter and an 18% gain from the fourth quarter of 2009, reports the Insured Retirement Institute (IRI). Variable annuity assets reached an all-time high of $1.5 trillion last year, the IRI adds.