Indexed Annuities - New Growth Opportunities
Conning Research: Indexed Annuity Business Poised for Growth
--Growth opportunity attracting new insurers and new products
(Hartford, CT) January 31, 2012—A number of changes in the economy, regulatory environment, equity markets, and consumer preferences have combined to once again drive growth in the indexed annuity business, according to a new study by Conning Research & Consulting.
“Since the financial crisis, the limitations to indexed annuity growth have given way to a more positive set of conditions for insurers in this line, and we saw new products and more importantly new players, entering the market,” said Scott Hawkins, analyst at Conning Research & Consulting. “The indexed annuity business had been under intense pressure as early as 2005, when uncertainty about which distribution channels could sell indexed annuities was coupled with negative publicity about product design and improving equity markets. Now, however, low interest rates are curtailing consumer interest in fixed annuities, and equity market volatility is diminishing their appetite for variable annuities, enhancing the case for indexed annuities.”
The Conning Research study, “Indexed Annuities: New Growth Opportunities” analyzes the current state of the indexed annuity market, identifying factors that indicate future robust growth as well as a number of internal and external challenges that insurers in this line—or considering entering this line—will face.
“The certainty of a guaranteed investment return, combined with the potential to earn extra index-linked returns offered by the indexed annuity, is particularly appealing to consumers after the equity market volatility of the past few years. But those same conditions have made this a difficult operating environment for insurers,” said Stephan Christiansen, director of research at Conning. “The indexed annuity line of business has the highest concentration of the three individual annuity types, certainly in part due to the product complexity and hedging requirements. Yet as annuities have struggled to compete for share of wallet with mutual funds, indexed annuities may prove to be a competitive advantage for those insurers who can meet the product, investment, and distribution challenges of this line.”
“Indexed Annuities: New Growth Opportunities” is available for purchase from Conning Research & Consulting by calling (888) 707-1177 or by visiting the company’s web site at www.conningresearch.com.
About Conning Research & Consulting
Conning Research & Consulting is a division of Conning, a provider of asset management and insurance industry research and consulting services to insurers. Conning Research & Consulting has published independent insurance industry research for 50 years, including market coverage of 30 segments of the industry in addition to industry forecasting and identification and analysis of major strategic issues. As a result of its wealth of experience and intimate knowledge of the insurance industry, Conning understands industry challenges and opportunities and provides in-depth analyses on a wide range of industry products and issues. Conning is headquartered in Hartford, CT.