A Shifting Landscape in the Individual Annuity Market Todd Giesing - - PDF document
Equity-Based Insurance Guarantees Conference Nov. 11-12, 2019 Chicago, IL A Shifting Landscape in the Individual Annuity Market Todd Giesing Teddy Panaitisor SOA Antitrust Compliance Guidelines SOA Presentation Disclaimer Sponsored by A
Equity-Based Insurance Guarantees Conference
Chicago, IL
A Shifting Landscape in the Individual Annuity Market Todd Giesing Teddy Panaitisor
SOA Antitrust Compliance Guidelines SOA Presentation Disclaimer
Sponsored by
TODD GIESING & TEDDY PANAITISOR LIMRA SECURE RETIREMENT INSTITUTE
11 NOVEMBER 2019 8:30 – 9:30 AM
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Todd Giesing Director, Annuity Research LIMRA Secure Retirement Institute Teodor (Teddy) Panaitisor Senior Research Analyst LIMRA Secure Retirement Institute
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$257 $265 $239 $222 $238 $220 $230 $237 $236 $222 $204 $234
$184 $156 $128 $140 $158 $147 $146 $141 $134 $107 $98 $100 $73 $109 $111 $82 $80 $72 $84 $96 $102 $116 $105 $134
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 (EST) Total Variable Fixed $238- $254
$142 42- $154 54 $95 $95- $100 00
Source: LIMRA Secure Retirement Institute (Dollars in billions)
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$1 $157.9 $1 $147.4 $1 $145.6 $1 $140.5 $1 $134.0 $1 $106.5 $9 $98.2 $1 $100.2
2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 2018 2018 2019 2019 (EST)
$95 $95 - $100 100
Source: LIMRA Secure Retirement Institute (Dollars in billions)
$0 $5 $10 $15 $20 $25 $30 $35 $40 $45 $50
Quarterly Sales (billions)
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GMIB, GMWB WB, & GMAB ride ders introdu duced “Rider Wars” GLWB WB ride der introdu duced Fina nancia ial l Cris isis is “GMIB Max” Mana naged d Volatili ility y Funds unds Ride der pullb llbacks, sale les restric iction ions, & buyb ybacks ks DOL L Fiduc ducia iary y Rule le Prop
DOL Fidu ducia iary y Rule le Imple plement nted Tech h Bubble ubble
Source: LIMRA Secure Retirement Institute (Dollars in billions)
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200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,600 2,800 3,000 $0 $10 $20 $30 $40 $50 $60 $70 $80 1990 91 92 93 94 95 96 97 98 99 2000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
S&P &P 500 500 Qua uart rterl rly VA Sale les (in Bi Bill llio ions) Yea ear
VA Sales S&P 500
Source: LIMRA Secure Retirement Institute (Dollars in billions) & Oxford Economics
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$1 $106 $96 $96 $84 $84 $77 $77 $68 $68 $48 $48 $38 $38 $41 $41
$25 25 $24 24 $36 36 $41 41 $44 44 $37 37 $41 41 $41 41
$27 27 $28 28 $25 25 $22 22 $22 22 $21 21 $19 19 $18 18
$1 $158 $1 $147 $1 $146 $1 $141 $1 $134 $1 $107 $98 $98 $1 $100
201 011 201 012 201 013 201 014 201 015 201 016 201 017 201 018 201 019 (EST) T)
VA employer plan sales VA sales - No GLB, either not available or elected VA sales - GLB elected
$95 $95 - $100 $100
$17 $17 - $18 $18
$36 6 - $38 $38 $42 2 - $44 $44
Source: LIMRA Secure Retirement Institute (Dollars in billions)
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$1.9 .9 $3.7 .7 $7.3 .3 $9.2 9.2 $11.2
201 014 201 015 201 016 201 017 201 018 201 019 9 (E (EST)
$14.5- $1 $15.5
Source: LIMRA Secure Retirement Institute (Dollars in billions)
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$0 $5 $10 $15 $20 $25 $30 $35 $40 $45 $50
Quarterly Sales (billions)
Total Variable Annuity Sales VA Sales Less RILA
If we exclude RILA’s from VA sales, VA’s would have faced a 7th
th
conse nsecutive e ye year r of de decl clines es in n 2018 018!
Source: LIMRA Secure Retirement Institute (Dollars in billions)
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$32.2 $3 $33.9 $3 $39.1 $47.8 $5 $53.5 $5 $59.1 $5 $55.0 $69.6
2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 2018 2018 2019 2019 (EST)
$78 $78 - $83 $83
Source: LIMRA Secure Retirement Institute (Dollars in billions)
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$18 $18 $21 $21 $22 $22 $28 $28 $29 $29 $32 $32 $26 $26 $29 $29 $13 $13 $12 $12 $16 $16 $18 $18 $23 $23 $26 $26 $28 $28 $40 $40 $32 $32 $34 $34 $39 $39 $48 $48 $54 $54 $59 $59 $55 $55 $70 $70
201 011 201 012 201 013 201 014 201 015 201 016 201 017 201 018 201 019 (EST) T)
Indexed employer plan sales Indexed sales - No GLWB, either not available or elected Indexed sales - GLWB elected
$78 $78 - $83 $83 $47 $47 - $49 $49 $30 $30 - $32 $32
Source: LIMRA Secure Retirement Institute (Dollars in billions)
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Source: LIMRA Secure Retirement Institute (Dollars in billions)
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Source: LIMRA Secure Retirement Institute (Dollars in billions)
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VA Sales FIA Sales
$100.2 $69.6 $184.0 $25.0
$10 102 to to $107 107 $76 $76 to to $81 $81
Source: LIMRA Secure Retirement Institute (Dollars in billions)
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VA RETAIL Sales FIA RETAIL Sales
$81.8 $68.4 $75 $75 to to $79 $79 $145.3 $23.7 $87 $87 to to $91 $91
Source: LIMRA Secure Retirement Institute (Dollars in billions)
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$6 $68.4 $6 $66.5
VA Retail NEW PREMIUM FIA Retail NEW PREMIUM
$1 $101 01.4 $3 $36.1 6.1
Source: LIMRA Secure Retirement Institute (Dollars in billions)
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$1 $18.0 $1 $19.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2013 2014 2015 2016 2017 2018 2019
VA Retail New Premium FIA Retail New Premium $24.7 $7.3
Source: LIMRA Secure Retirement Institute (Dollars in billions)
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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percent of Annuity Sales - VA Percent of Annuity Sales - FIA
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Source: LIMRA Secure Retirement Institute
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percent of Annuity Sales - VA Percent of Annuity Sales - FIA
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Source: LIMRA Secure Retirement Institute
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$3 $34.9 $2 $24.7 $29.3 $30.8 $30.9 $38.7 $3 $34.2 $4 $45.7
2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 2018 2018 2019 2019 (EST)
$47 $47 - $52 $52
Source: LIMRA Secure Retirement Institute (Dollars in billions)
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$17. 17.5 $16 16.2 $16. 16.4 $23 23.4 $20 20.7 $19. 19.7 $26 26.4 $38. 38.8 $34 34.4
$12. $12.2 $10. $10.8 $11. $11.8 $10. $10.0 $5. $5.5 $4. $4.7 $9. $9.1 $8. $8.2 $8. $8.6 $29. $29.7 $27. $27.0 $28. $28.2 $33. $33.4 $26. $26.2 $24. $24.4 $35. $35.5 $47. $47.0 $43. $43.0
201 011 201 012 201 013 201 014 201 015 201 016 201 017 201 018 201 019 (EST) T)
Out of Surrender Charge With Charge
Source: LIMRA Secure Retirement Institute (Dollars in billions)
$0.2 $1 $1.0 $2 $2.2 $2 $2.7 $2 $2.7 $2 $2.8 $2 $2.2 $2 $2.3 $2 $2.4
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$8 $8.1 $7 $7.7 $8 $8.3 $9 $9.7 $9 $9.1 $9.2 $8 $8.3 $9 $9.7 $1 $10.0
2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 2018 2018 2019 2019 (EST)
Source: LIMRA Secure Retirement Institute (Dollars in billions)
Regul gulator
nviron
ent wi will hav ave e a subs bstan antial al impa pact on the e annu nuity market
Regulatory & economic environment will have the biggest impact on annuity sales over the next 5 years
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$236. $236.9 $235. $235.7 $222. $222.1 $203. $203.5 $233. $233.7 $238 238 to to $254 $254 $212 212 to to $229 229 $21 216 6 to
$233 $22 223 3 to
$239 $23 230 0 to
$247 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Overall Individual Annuity Sales Fixed Annuity Sales Variable Annuity Sales
Source: LIMRA Secure Retirement Institute (Dollars in billions)
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1.52%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 10.0% 12.0% 12.0% 14.0% 14.0% 16.0% 16.0%
1962 1962 1967 1967 1972 1972 1977 1977 1982 1982 1987 1987 1992 1992 1997 1997 2002 2002 2007 2007 2012 2012 2017 2017
Interest rate risk is real for manufacturers and consumers
Source: U.S Treasury
2020 2021 2022 2023 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
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Source: U.S Treasury & Oxford Economics
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0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0%
Treasury Yield %
U.S. Treasury Yields
3 mo 1 yr 3 yr 5 yr 10 yr 30 yr
As of
10/07 07/19 30 30-yr r 2. 2.05 05% 10 10-yr r 1. 1.56 56% 5-yr r 1. 1.38 38% 3-yr r 1. 1.41 41% 1-yr r 1. 1.64 64% 3-mo mo 1. 1.75 75%
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Source: U.S Treasury
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Source: LIMRA Secure Retirement Institute (Dollars in billions)
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Source: LIMRA Secure Retirement Institute (Dollars in billions)
Gu Guaran antee eed d incom
e sales es wi will gr grow, but not as fast as accum umulation n produ ducts
Americans buy annuities to layer on protection
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Source: LIMRA Secure Retirement Institute
Acc Accumulatio ion Inc ncome La Later Inc ncome Now
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$60 60 $60 60 $82 82 $90 90 $99 99 $101 101 $10 102 $125 125 $119 119 $11 115 $10 106 $10 107 $97 97 $81 81 $65 65 $71 71
$7.6 $7.7 $8.3 $9.7 $9.1 $9.2 $8.3 $9.7
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Accumulation Income Later Income Now
Growth will be minimal over the next 5 years
Source: LIMRA Secure Retirement Institute (Dollars in billions)
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# # of
Americans age 55+
Source: Oxford Economics Source: Oxford Economics
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$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500
2010 2011 2012 2013 2014 2015 2016 2017 2018
S&P 500 Are pe peop
le ne near arin ing or enterin ing retir tirement t gettin ing too too com
able le the sa same pa pattern of f retu turns wi will ll contin inue?
Source: Yahoo Finance
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SPIA BUYE YERS
71.6 72.1 72.0 2016 2016 2017 2017 2018 2018
Average Ag Age
VA GL GLB B BUYE YERS
61.8 62.9 63.1 2016 2016 2017 2017 2018 2018
Average Ag Age
FIA GL GLB BUYE YERS
62.4 63.0 63.2 2016 2016 2017 2017 2018 2018
Average Ag Age
DIA BUYE YERS
59.1 60.0 61.7 2016 2016 2017 2017 2018 2018
Average Ag Age
Source: LIMRA Secure Retirement Institute
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Ar Are Am Americans tak aking a a risk isky be bet
hen to
add gua guaranteed lif lifetime inc income to
heir port portfolio io?
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Jan 1968 Apr 1968 Jul 1968 Oct 1968 Jan 1969 Apr 1969 Jul 1969 Oct 1969 Jan 1970 Apr 1970
$0k $500k $1,000k $1,500k 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92
Source: LIMRA Secure Retirement Institute analysis. The portfolio has an asset allocation of 42.5% large company stocks, 17.5% small company stocks, and 40% intermediate-term government bonds and is rebalanced annually. The initial withdrawal amount was $1,686 per month, or for the first year $20,235 or 4.05% of beginning assets. The individual retiree withdrew the same dollar amount within each calendar year, and adjusted annually for the prior calendar year’s inflation rate.
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Source: LIMRA Secure Retirement Institute
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Dear Advisor, The 5 most valuable services are …
Mi Minim imiz ize risk
nning
t of mo money Pro rotect t portf rtfolio pinc ncipa pal Minim Minimiz ize ta taxes Ha Have a mo more re re realisti tic pictu ture of life I can afford in re retir tirement Ma Maintain perspe pectiv tive and think ink clearly rly of events ts/ / tre rend nds
Mo Most st Value ued d Ad Adviso sor Services es
Percent of pre pre-retirees es
Source: LIMRA Secure Retirement Institute
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Source: LIMRA Secure Retirement Institute
Un Under derstan andi ding ng wh where e asset sets wi will flow
wil ill le leave de deferred ann annuity ty pr product cts in in the the ne next xt 5 year ears
Source: LIMRA Secure Retirement Institute
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Inde dexed Fi Fixed- d-Rat ate D Def efer erred Var ariab able Cumulative e Defer erred d An Annu nuity Outflo flows s 201 019-20 2023 23 (billions) s)
$200 00 - $225 25
$2 $265 65 - $285 $285
Source: LIMRA Secure Retirement Institute (Dollars in billions)
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$15.7 $51.8 $55.1 $17.6 $9.7
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: LIMRA Secure Retirement Institute (Dollars in billions)
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U.S. Retirement Milestones
AGE 55
If retired, may withdraw 401(k) savings without penalty
AGE 59½
Can withdraw tax-deferred assets without IRS penalty
AGE 62
Partial Social Security benefit eligibility
AGE 65
Medicare benefit eligibility
AGE 66-67
Full Social Security benefit eligibility
AGE 70
Maximum Social Security benefit eligibility
AGE 70½
Must take RMD (required minimum distribution)
Source: LIMRA Secure Retirement Institute
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Adv Advancin ing the fina financial l se services s ind industry by y em empowering ou
embers wit ith knowledge, ins insig ights, con
and so solu lutio ions
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Todd Giesing ing Director, Annuity Research LIMRA Secure Retirement Institute tgiesing@limra.com 860-285-7899 Teodo dor (Tedd ddy) Pana naiti tisor Senior Research Analyst LIMRA Secure Retirement Institute tpanaitisor@limra.com 860-285-7894