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The Method behind the Madness of Conflicting Annuity Sales Reports

It’s a blessing and a curse at the same time. The “it” is the host of annuity sales statistics that come out each quarter.

On the blessing side of things, annuity specialists are fortunate to be able to see the statistical highlights of annuity sales from an assortment of researchers. That gives a multi-dimensional look at the business, and that can prove invaluable when it comes to making decisions regarding the practice and client recommendations.

It’s all the more valuable since the research organizations generally make annuity sales highlights available to business media, which disseminate the numbers widely. Annuity specialists do not typically have the budget to pay for the full reports on their own, so the public dissemination at least puts the key numbers within easy reaching distance. Talk about a good deal for advisors: this is it.

And now for the curse. This is the difficulty that comes from trying to weigh the findings when they appear to disagree with one another in the very same quarter. If a reader does not know what’s behind the numerical differences, frustration and serious misunderstandings can result.

Example

Consider the seeming disparity in some recent second quarter annuity sales data.

In reporting second quarter annuity sales, SNL Financial noted that MetLife had moved into first place during the quarter, up from second place in the same quarter last year. SNL also notes that Prudential Financial, which had been in first place in SNL’s second quarter rankings last year, dropped into second place for second quarter this year.

But another annuity sales report, this one from Morningstar, shows more drastic changes. It shows that MetLife was in fifth place in second quarter this year, down from third place in second quarter last year. And it shows Prudential in sixth place this year, down from first place in the Morningstar report for the same period last year.

The sober question to ask is: how can the researchers publish such vast differences in second quarter annuity sales for two of this country’s biggest carriers? The answer has to do with methodology. Researchers don’t all study the same annuity areas or use the same filters.

For instance, SNL said its figures reflect business for individual and group annuities, both fixed and variable. The Morningstar figures also reflect individual and group sales, but only for variable annuities. Furthermore, SNL’s figures reflect statutory total annuity considerations in the United States, as per the National Association of Insurance Commissioners.  The Morningstar figures reflect new sales, defined as all new money going into a contract. (Note: Morningstar reports net sales too but, in this particular example, the rankings are for new sales.)

There are other differences in methodology, but we won’t belabor them here.

The point is, the researchers differentiate themselves by the markets they serve and the approaches they take. This helps them meet the information needs of their target audiences, but it also accounts for some of the seeming incongruities in the annuity data that advisors see in the general media.

Other reports, too

A number of other firms and organizations make quarterly annuity results available in public venues (as well as to their own customers, members and study participants). Some of the well-known providers, in addition to SNL and Morningstar, follow. Here, too, there are differences in scope and parameters.

  • LIMRA. This researcher publishes new retail sales results for fixed and variable annuities, separately and in total, in the individual market. The data include fixed annuity detail (fixed rate deferred, book value, market value, indexed, etc.) and variable annuity account detail (separate and fixed).
  • Insured Retirement Institute. This trade group puts out quarterly total new sales results for variable and fixed annuities, plus some additional detail. These results combine new variable annuity sales data from Morningstar and new fixed sales data from Beacon Research.
  • Beacon Research. This researcher publishes data on fixed annuities, including indexed, income, fixed rate (market value and non-market value). The numbers are for new individual sales with 1035s/rollovers from other carriers included, but with contract-to-contract rollovers within the same carrier excluded.
  • Wink Inc. This resource publishes new sales and other data on indexed annuities. The publicly available annuity numbers are for individual and group sales, including 1035 exchanges and rollovers (but carriers that participate in the study receive sales net of 1035s and rollovers).
  • CANNEX USA. This firm reports on single premium income annuities – not actual sales but advisor inquiries to its online exchange.

Other researchers conduct annuity sales studies on a more boutique level, and some distributors and carriers also provide tallies but through the lens of their own firm and products. That means there’s plenty of annuity sales data to go around.

The fly in the ointment is that data come with differences, some of them significant. The differences may include not just industry segment studied but also carriers and products included, definitions used for terms and products, categories of features examined, net or gross results, and many other factors.

Sharp-eyed practitioners will catch the critical differences. At least that is the hope. But this doesn’t always happen. Those who are in a hurry or who are not yet up to speed on annuity data may assume it’s all somehow the same, may be overwhelmed at the volume, and/or may discount perceived discrepancies as “bad data” suitable only for the trash heap.

Most researchers do indicate their methodology and/or source and scope of study. However, that information does not usually appear at the top of a data summary, or at the top of news reports about the sales reports. In-the-know advisors therefore need to read the data summaries straight through, top to bottom, and to ask questions about parameters if something doesn’t make sense.

Some other sectors of the insurance business – such as disability and long-term care – do not have as deep a reservoir of publicly available sales data for field professionals to sample. In view of this, the annuity data pool is actually a tremendous resource for advisors, as long as those who are looking don’t fall in and drown. 

Linda Koco, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning. Linda can be reached at [email protected] [email protected].


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