There are several types of annuities. Deferred annuities generally accumulate assets over a long period of time, with withdrawals usually as a single sum or as an income payment beginning at retirement. Immediate annuities allow purchasers to convert a lump sum payment into a stream of income that begins right away.
Deferred and immediate annuities can be either fixed or variable. Generally, interest credited and payments made from a fixed annuity are based on rates declared by the company, which can change only yearly. Fixed annuities are considered “general account” assets. In contrast, variable annuity account values and payments are based on the performance of a separate investment portfolio, thus their value may fluctuate daily. Variable annuities are considered “separate account” assets.
There are a variety of fixed annuities. One example, the equity-indexed annuity, is a hybrid of the features of fixed and variable annuities. It credits a minimum rate of interest, just as other fixed annuities do, but its value is also based on the performance of a specified stock index—usually computed as a fraction of that index’s total return. Annuities can also be classified by marketing channel, in other words whether it is sold to groups or individuals. (See the Premiums by Line table, page____.)
| Total | ||||
|---|---|---|---|---|
| Year | Variable | Fixed | Amount | Percent change from prior year |
| 2003 | $129.4 | $89.4 | $218.8 | -0.5% |
| 2004 | 132.9 | 87.9 | 220.8 | 0.9 |
| 2005 | 137.6 | 78.9 | 216.5 | -1.9 |
| 2006 | 184.2 | 72.8 | 257.0 | 18.7 |
| 2007 | 160.4 | 78.3 | 238.7 | -7.1 |
Measured by premiums written, annuities are the largest life/health product line, followed by life insurance and health insurance (also referred to in the industry as accident and health). Life insurance policies can be sold on an individual, or "ordinary," basis or to groups such as employees and associations. Accident and health insurance includes medical expense, disability income and long-term care. Other lines include credit life, which pays the balance of a loan if the borrower dies or becomes disabled, and industrial life, small policies whose premiums are generally collected by an agent on a weekly basis.
graph - SALES OF INDIVIDUAL ANNUITIES BY DISTRIBUTION CHANNELS, 2003 AND 2007 (1)
(1) Preliminary.
Source: LIMRA International.
graph - VARIABLE ANNUITY TOTAL SALES BY DISTRIBUTION CHANNEL, 2007 (1)
(1) As of December 31, 2007.
(2) Regulated by the Financial Industry Regulatory Authority.
Source: Morningstar, Inc.
NET ASSETS OF VARIABLE ANNUITIES, 1998-2007 ($ billions)
Source: Morningstar, Inc.
| Rank | Company | New sales |
|---|---|---|
| 1 | Teachers Insurance & Annuity Association | $13,925 |
| 2 | RiverSource Life Insurance Company | 5,593 |
| 3 | Jackson National Life Insurance Company | 5,136 |
| 4 | John Hancock Life lnsurance Company (USA), Venture III | 5,067 |
| 5 | Variable Annuity Life Insurance Company | 4,895 |
| 6 | Pacific Life Insurance Company | 4,266 |
| 7 | American Skandia Life Assurance Company | 3,514 |
| 8 | Metropolitian Life Insurance | 3,269 |
| 9 | Hartford Life Insurance Company | 3,241 |
| 10 | John Hancock Life lnsurance Company (USA), Venture 2006 | 3,165 |
| Rank | Company | Total sales | Market share |
|---|---|---|---|
| 1 | Allianz | $5,423.7 | 21.53% |
| 2 | Aviva | 4,346.4 | 17.25 |
| 3 | American Equity | 2,093.6 | 8.31 |
| 4 | Old Mutual | 1,960.0 | 7.78 |
| 5 | Midland National Life | 1,655.9 | 6.57 |
| 6 | ING | 1,312.6 | 5.21 |
| 7 | Great American Financial | 1,007.1 | 4.00 |
| 8 | Jackson National Life | 893.5 | 3.55 |
| 9 | EquiTrust | 878.5 | 3.49 |
| 10 | Conseco/Bankers Life | 783.9 | 3.11 |
| Rank | Company | 2006 | 2007 |
|---|---|---|---|
| 1 | AIG Annuity | $5,138 | $5,213 |
| 2 | New York Life | 2,518 | 2,156 |
| 3 | Allstate Financial | 3,266 | 1,747 |
| 4 | Principal Financial Group | 857 | 1,583 |
| 5 | AEGON/Transamerica | 1,132 | 1,350 |
| 6 | Genworth Financial | 1,165 | 717 |
| 7 | Jackson National Life | 798 | 571 |
| 8 | Western-Southern Financial | 615 | 541 |
| 9 | Symetra Financial | 390 | 523 |
| 10 | Hartford Life | 349 | 486 |
| Premiums | |||
|---|---|---|---|
| Rank | Company | 2006 | 2007 |
| 1 | Hartford Life | $4,801 | $5,080 |
| 2 | Pacific Life | 3,334 | 3,761 |
| 3 | AXA | 2,014 | 2,563 |
| 4 | Nationwide Financial | 1,611 | 1,876 |
| 5 | John Hancock | 1,279 | 1,712 |
| 6 | ING | 988 | 1,617 |
| 7 | RiverSource Life Insurance | 1,143 | 1,182 |
| 8 | Jackson National Life | 676 | 1,066 |
| 9 | AIG/SunAmerica | 1,003 | 985 |
| 10 | Lincoln Financial | 654 | 955 |