By Linda Koco
There was something for just about every annuity wonk in the beginning of 2013. Forethought is moving forward as a variable annuity player. ING U.S. has snatched up a former Hartford Financial exec to head its fixed annuity business. And, four new products debuted (two deferred income annuities, a new fixed indexed annuity and a new “simpler” variable annuity).
If that has you panting for more, read on for a few details and takeaways:
Forethought: The announcement that Forethought Financial Group Inc. has completed the previously-announced acquisition of the individual annuity new business capabilities of The Harford Financial is a dazzler as is news that the company plans to launch its first variable annuity in first quarter 2013. Forethought has already opened offices in Simsbury, Conn., and Berwyn, Pa., to support the annuity business, and says it will distribute through a broker-dealer which it acquired from The Hartford and has since named Forethought Distributors LLC.
Takeaway: The industry now knows, for sure, that Forethought means to be a player in variable annuities, not just a sign-holder. Annuity pros will therefore be interested in seeing what that new Forethought variable annuity will look like. The fact that the company isn’t starting from scratch–it bought Hartford’s product management, distribution and marketing units—will be important to advisors. After all, Forethought is not a household name in variable annuity circles—not yet, anyhow—so the advisors will want to know about bench strength. For the same reason, it doesn’t hurt that Robert Arena will lead the annuity organization, called Forethought Annuity; he previously led The Hartford’s individual annuity business so he knows the ropes.
ING U.S.: This company just hired David Bedard to lead its fixed annuities business. His name should ring a bell. Bedard was formerly executive vice president of global annuities for The Hartford Financial Services Group and earlier served as chief financial officer of the firm's wealth management business. Now, as ING U.S.’s new president of annuities, Bedard is charged with “driving growth and long-term success for ING U.S. in the fixed annuity market.” The company’s annuities segment includes fixed, fixed-index and immediate annuities.
Takeaway: This is not a ho-hum hire. Bedard will be part of ING’s retirement solutions executive team, which collaborates on overall business strategy and direction. By putting Bedard into the picture, ING is following through on its intensions to align its annuity business with ING U.S.’s overall retirement strategy. Not incidentally, Bedard is a CPA. In the job he’s taking on, that number-crunching capability could come in handy.
Deferred income annuities (DIAs): First out of the gate this year with a new DIA was American General Life Companies. They launched Future Income Achiever, which allows the client to select an annuity income start date between 12 months and 40 years from purchase, and which includes three death benefit options, a medical underwriting option and four annual payment increase options. Just seven days later, The Guardian Insurance & Annuity Co. entered the DIA market with its Guardian SecureFuture Income Annuity. Available for a minimum initial premium of $5,000, this DIA accepts additional payments up to 13 months before the selected income start date. Owners may elect to receive monthly, quarterly, semi-annual or annual income payments, and may change their choice at any time up until the day before the first payment is made.
Takeaway: As noted last year, the DIA market is small but growing. There were six to eight players through year-end 2012, and now there are two more. Carriers are moving in this direction as part of their growing strategy to offer retirement income solutions, and in response to rising consumer demand for such products. Unlike traditional income annuities, these policies allow annuity owners to pick an income start date way into the future, if they like—a “set it and forget it” solution that appeals to some retirement-minded consumers.