Wouldn’t you know it? Once
again, just when the annuity
industry had stopped talking
about the Guggenheim Partners expansion
into “the annuity space,” the Chicago–
and New York–based private
equity went and made another annuity-
The natural question is, will this deal
have much impact on the annuity market?
First, an overview of the deal. This
time, Guggenheim Partners made their
move through a company they own
called Delaware Life Holdings. This firm
has agreed to buy the domestic U.S. annuity
business and certain life insurance
businesses of Sun Life Financial, Toronto.
It will be a cash transaction, for $1.35
Once the deal is done, the company’s
name will change to Delaware Life
Sun Life provided these other highlights:
- The sale includes Sun Life Financial’s
domestic U.S. variable annuity,
fixed annuity and indexed annuity products,
corporate and bank-owned life insurance
products and variable life insurance
- The transaction is expected to
close by the end of second quarter 2013,
though that’s subject to regulatory approvals
and closing conditions.
- Guggenheim Partners will provide
services to the company including investment
On the surface level, this deal would
appear to have no overpowering market
impact on the U.S. annuity business.
After all, Sun Life Financial had already
announced in late 2011 that it
would stop selling new annuities. So
most annuity professionals have been
all but expecting the Canadian company
to find a buyer for the existing annuity
Not surprisingly, Sun Life Financial’s
market share for annuity sales in the
United States has fallen, making the impact
of the deal all the less significant for
For example: the firm’s variable annuity
sales, which had ranked in 16th
place on LIMRA’s list of U.S individual
annuity sales in third quarter 2009, did
not even appear on LIMRA’s Top 20
chart in third quarter 2012. So too with
indexed annuities: The firm had ranked
in 18th place on AnnuitySpecs.com’s list
of indexed annuity sales in third quarter
2009, but three years later, the company
did not even appear on the Annuity
Specs’ list of indexed annuity players.
True enough, the seller – Sun Life Financial
– is Canada’s third-largest life insurance
company. But that claim to fame
does little to influence how the recent
deal affects the U.S. annuity business.
So annuity professionals might just
slough off this piece of industry news as
a bit of idle chatter, nothing more.
Beefing Up the Annuity Business
On second thought, however, the deal
does have a kernel of significance. That
is because it represents one more sign
that Guggenheim Partners is continuing
to beef up its annuity and insurance
Before the Sun Life Financial purchase,
Guggenheim Partners had already
created or purchased Guggenheim
Life and Annuity, Security Benefit
Life, Standard Life of Indiana (reinsured
life and annuity book), Equitrust and Industrial
Alliance Insurance and Financial
Services of Quebec.
In addition, unnamed wags have trotted
out the Guggenheim Partners name
as a possible suitor for Aviva US, a big
indexed annuity writer based in Des
The Iowa carrier has made no such
announcement to date, and neither
has it confirmed the speculation. Still,
the mere linking of the Guggenheim
name to such a potential purchase
has had an effect on the industry —
by stirring up uncertainty about the
firmness of the market and the go-to
places for new cases.
That uncertainty has taken on a life
of its own. For instance, it has spurred
some annuity carriers to respond competitively
to the notion of private equity
expansion into the business.
Last month, for example, Allianz, the
top-selling indexed annuity player according
to AnnuitySpecs.com’s rankings,
sent out a marketing piece that raises
questions about what hedge funds, private
equity groups and money managers
are doing in the annuity business.
“Are they controlled by outside entities
that don’t have insurance background
or experience?” the Allianz message
asks. “Do their products feature
rates that are far above what the competition
The Allianz document does not mention
names of firms to which it is referring.
But it is hard to imagine that
readers would not view the message as
an arrow aimed straight into the beating
hearts of the private equity companies
that have been buying up annuity
assets in recent years. These companies
include not only Guggenheim Partners
but also Apollo Global Management
and Harbinger Capital Partners.
The Allianz message may also serve
as a prod to the conscience of producers
who might be toying with whether to
represent carriers owned by private equity
companies. In this sense, the message
is an “are you sure you want to do
this?” kind of communication.
All of which goes to suggest that
anyone who thinks the insurance and
annuity business is not competitive is
largely off track and/or misinformed.
One could even argue that the industry
is even more competitive now that the
environment of prolonged low interest
rates and sustained market volatility
is forcing shake-ups everywhere. The
players are jousting, and the private equity
players are part of the action.
For these reasons, then, the Guggenheim/
Sun Life Financial deal does
have meaning for the annuity industry.
It awakens ideas about shifting sands,
suitable partners and future destiny.
That’s not an immediate and overpowering
impact, but it forces a look at what
is and what could be. Business forms
and flourishes on just such thoughts.