INSURANCE & RETIREMENT SERVICES ANALYTIC REPORTING FOR ANNUITIES ANNUITY MARKET ACTIVITY REPORT H1 2013

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1 INSURANCE & RETIREMENT SERVICES ANALYTIC REPORTING FOR ANNUITIES ANNUITY MARKET ACTIVITY REPORT H1 2013

2 Table of Contents About the I&RS Analytic Reporting Service... 3 Recent activity... 4 First-half Market Summary... 4 Distribution... 6 Insurance / holding companies... 8 Products About DTCC Source: Analytic Reporting for Annuities is a service of Insurance & Retirement Services of National Securities Clearing Corporation (NSCC), a DTCC Subsidiary. Visit for more information or contact your I&RS Relationship Manager The Depository Trust & Clearing Corporation. All rights reserved. The information in this report may not be (i) used as input data in the creation or calculation of any index, value or other work, (ii) used to create any financial instrument or investment product that is based on, or seeks to match the performance of, values included in this report, or (ii) distributed or published in any form for any purpose, in each case, without the express written permission of DTCC. DTCC s H Annuity Market Activity Report Page 2 of 11

3 About the Insurance & Retirement Services (I&RS) Analytic Reporting for Annuities Service Analytic Reporting for Annuities is an award-winning online information service that provides an unprecedented view of the market for annuity products based on data from transactions processed for the insurance industry by DTCC s National Securities Clearing Corporation subsidiary. Analytic Reporting helps constituents in a variety of functions to make better informed decisions and identify opportunities for increasing sales and improving business performance. In the first half of 2013, over $85 billion in annuities transactions were processed for: 112 insurance company participants (representing 43 parent/holding companies) 128 distributors 3,236 annuity products The transactions processed provide a view of a broad range of broker/dealers with a particular concentration in non proprietary distribution. I&RS is connected to over 450 distribution and carrier firms representing product segments including life insurance, fixed and variable annuity products and distribution channels including banks, Brokerage General Agencies, Insurance Marketing Organizations and Insurance Broker Dealers. The transactions processed by I&RS provide a view of a broad range of broker/dealers with a particular concentration in non proprietary distribution. If you d like more information about this report or about the Analytic Reporting for Annuities service, please contact I&RS at , or us at insurance@dtcc.com. Analytic Reporting for Annuities is a service offering of National Securities Clearing Corporation, a subsidiary of DTCC. DTCC s H Annuity Market Activity Report Page 3 of 11

4 Recent activity Annuity inflows processed in June declined by 9.7% to $7.2 billion, from $7.9 billion in May. Compared to June 2012, inflows in June 2013 increased by 3.4%. Out flows declined by 11.7% compared to May, from $7.3 billion to $6.4 billion. Net flows in June increased by 12% to $780 million from $697 million in May. First-half 2013 Market Summary Inflows into annuity products processed in the first half of 2013 totaled almost $45 billion, increasing by nearly 4%, or $1.7 billion, compared to the first half of Outflows totaled almost $41 billion, increasing by over 13%, or $4.8 billion, compared to the first half of The resulting net cash flows totaled $3.6 billion, declining by over 46% compared to the first half of Compared to the second half of 2012, inflows in 2013 increased by 6%, out flows increased by 9% and net flows declined by just under 20%. DTCC s H Annuity Market Activity Report Page 4 of 11

5 The difference in the share of annuity inflows going into qualified and non-qualified accounts has been narrowing over the past several months. Non-qualified accounts captured 56% of all inflows in June, while qualified account types captured 44% of inflows. Net cash flows into non-qualified accounts remain negative although the recent trend has been improving. Net flows have improved from negative $658 million in December to negative $144 million in June. DTCC s H Annuity Market Activity Report Page 5 of 11

6 Distribution The data provided in Analytic Reporting is unique from that available from other data providers in that subscribers may view outflow data along with inflows, thereby demonstrating what is retained for every dollar that is brought in. Analysis of inflows, out flows and net cash flows yields a view of each distributor s current cash flow ratio. The scatter chart below shows that a relatively small number of distributors have high net cash flows resulting from high inflows and low out flows. This national view of the distribution market can be quite different from the view for individual carriers who can compare their own current cash flow ratios by distributor to the national benchmarking information. The top 10 distributors accounted for 68% of all inflows in the first half of DTCC s H Annuity Market Activity Report Page 6 of 11

7 The Territory Management feature of Analytic Reporting allows users to track and benchmark their firm s performance and market share in any combination of states, cities and zip codes, providing a geographic view of market activity, including where business is being done and how business is being conducted in different product types and account types. The top 10 states ranked by inflows (billions) in the first half of 2013 accounted for over 45% of all inflows. Mapping cash flows by zip code in California yields the following view of annuity product distribution in the state: Users of Analytic Reporting can compare the national level of benchmarking information to their own distribution by zip code to understand their market share and relative market performance in any area of the country. DTCC s H Annuity Market Activity Report Page 7 of 11

8 Insurance / holding companies The time between the end of a quarter and the date that carrier cash flow information is released in Analytic Reporting is referred to as the embargo period. Company and product specific cash flow information is released after the embargo period in order to allow for the release of quarterly earnings reports by publicly traded companies. The embargo period is two months after the first, second and third fiscal quarters, and three months after the fiscal year-end. Company and product specific information in this report is through June The top 10 insurance / holding companies ranked by inflows captured almost $35 billion of inflows, or over 78% of total inflows in the first half of the year. The top 10 insurance / holding companies ranked by inflows in the first half of 2013 were: Holding Company Inflows ($B) Market Share Prudential PLC $ % Lincoln National Corporation $ % Prudential Financial Inc $ % American International Group, Inc. $ % Aegon NV $ % Nationwide Financial Services Inc $ % Pacific Life $ % Metlife, Inc $ % Ameriprise Financial, Inc. $ % AXA SA $ % The top 10 insurance / holding companies ranked by net cash flows accounted for over $15 billion in positive net flows in the first half of Twenty seven insurance parent/holding companies had positive net flows totaling $17 billion while sixteen experienced negative net flows totaling more than $13 billion. The top 10 parent/holding companies ranked by net flows were: DTCC s H Annuity Market Activity Report Page 8 of 11

9 Rank Holding Company Net flows ($B) 1 Prudential PLC $ Lincoln National Corporation $ Ameriprise Financial, Inc. $ Prudential Financial Inc $ Protective Life Corporation $ Nationwide Financial Services Inc $ New York Life Insurance Company $ Allianz SE $ Ohio National Financial Services $ Aegon NV $ 0.3 Net flows for all insurance carriers in the first half ranged from a high of $6 billion to a low of $5 billion. Nineteen of the 43 insurance / holding companies had a current cash flow ratio of more than 50%, meaning that there was $2 or more of inflows for every $1 of out flows. The following chart plots inflows and net flows to show the range of current cash flow ratios. DTCC s H Annuity Market Activity Report Page 9 of 11

10 Products Of the 3,236 annuity products for which transactions were processed: 610 products had positive net flows totaling almost $35 billion 2,624 products had negative net flows totaling more than $31 billion 64 products had more than $100 million in positive net flows 5 products had more than $1 billion in positive net flows The top 10 annuity products ranked by inflows captured 36% of all inflows. Product Inflows ($B) Market Share Perspective II 05/05 $ % Rava5 Advantage Variable Annuity $ % Perspective L-Series $ % Pru Premier Retirement Va B Series $ % Usa Series Va $ % Choice Plus Assurance B Class $ % Elite Access $ % Pru Premier Retirement Va L Series $ % Choice Plus Assurance L Share $ % Polaris Platinum III $ % DTCC s H Annuity Market Activity Report Page 10 of 11

11 The top 10 annuity products ranked by net flows captured over $13 billion in positive net flows. Product Net flows Perspective II 05/05 $ 3.12 Rava5 Advantage Variable Annuity $ 2.08 Pru Premier Retirement VA B Series $ 1.71 Perspective L-Series $ 1.48 Elite Access $ 1.00 Choice Plus Assurance B Class $ 0.95 Pru Premier Retirement VA L Series $ 0.87 Polaris Platinum III $ 0.76 Usa Series VA $ 0.75 Vision Basic $ 0.71 About DTCC DTCC has operating facilities and data centers around the world and, through its subsidiaries, automates, centralizes, and standardizes the post-trade processing of financial transactions for thousands of institutions worldwide. With 40 years of experience, DTCC is the premier post-trade market infrastructure for the global financial services industry, simplifying the complexities of clearance, settlement, asset servicing, global data management and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, derivatives, money market instruments, syndicated loans, mutual funds, alternative investment products, and insurance transactions. In 2012, DTCC s subsidiaries processed securities transactions valued at approximately US$1.6 quadrillion. Its depository provides custody and asset servicing for securities issues from 131 countries and territories valued at US$37.2 trillion. DTCC s global trade repositories record more than US$500 trillion in gross notional value of transactions made worldwide. DTCC s H Annuity Market Activity Report Page 11 of 11