Sales through advisors, broker-dealers and IMOs held up better
than sales through banks.
A top executive at American International
Group says U.S. annuity sales seem to be firming up.
Kevin Hogan, the chief executive officer of
AIG’s Life & Retirement unit, talked about the sales pipeline Tuesday,
during a conference call the company held to go over its latest earnings.
Hogan told the analysts that, because of the
effects of COVID-19 and the pandemic-related social distancing rules, “the
quarter was the lowest in memory.”
But, “towards the latter part of June, we saw
some real signs of life,” Hogan said.
The bank channel suffered the most serious
disruption: AIG annuity sales through that channel fell about 60%.
But sales through the bank channel in July
were almost twice as high as sales in June, Hogan said.
At financial advisors, broker-dealers and
insurance marketing organizations, sales fell about 40%, Hogan said.
AIG responded to falling interest rates by
repricing its products quickly. Now, other issuers have caught up with
repricing, and that may be starting to level the playing field, Hogan said.
Many advisors have now shifted to virtual
sales practices, Hogan added.
Thanks to the marketwide pricing realignment,
and the sales system shift, sales through advisors, broker-dealers and IMOs
also looked much stronger in July than in June, Hogan said.
“The pipeline is growing,” Hogan said. “Our
sales of annuities per day continued to increase. So, we’re pretty optimistic
that, if conditions continue the way they are, we’ll see recovery in July over
June, and in the third quarter over the second.”
Meanwhile, Hogan said, sales of life insurance
increased 4%, in spite of all of the disruption.
“Our direct channel is performing particularly
well,” Hogan said.
At the institutional level, sales of group
annuities to employers that want to transfer pension risk have been strong, and
the sales pipeline for life reinsurance deals also looks good, Hogan said.
“We feel cautiously optimistic that the second
quarter will be the low water mark, and that our strategy will prevail in the
third quarter and beyond,’ Hogan said.
In remarks about the effects of COVID-19 on
claims, Hogan said that the overall net effect of the pandemic on AIG’s
results is just modestly higher than the kinds of mortality levels already
built into pricing assumptions.
About 40% of the death claims appear to
reflect an acceleration of claims for insureds who were likely to have died
within the next five years, even if the COVID-19 outbreak had not happened,
Hogan said.
Hogan’s remarks about advisor channel strength
appear to resemble what other carriers are reporting
At Prudential Financial, for example, U.S.
individual annuity sales through insurance agents fell just 32% between the
second quarter of 2019 and the latest quarter, to $496 million.
Prudential’s annuity sales through wirehouses,
independent financial planners and banks fell more than 50%.
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