Insurance & Retirement Services Analytic Reporting for Annuities Service. ANNUITY MARKET ACTIVITY REPORT First Half 2014

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1 Insurance & Retirement Services Analytic Reporting for Annuities Service ANNUITY MARKET ACTIVITY REPORT First Half 2014

2 Table of Contents About the Analytic Reporting for Annuities Service... 3 Executive Summary... 4 H114 Market Summary Cash Flows... 6 H114 Landscape of Distribution Geographic View of Market Activity Overview of Insurance / Holding Companies Product Inflows and Net flows About DTCC Source: Analytic Reporting for Annuities from the Insurance & Retirement Services of National Securities Clearing Corporation, 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. DISCLAIMER This Report is based solely upon data provided to DTCC, including its subsidiaries, by DTCC clients. DTCC makes no representation or warranty that this Report accurately reflects past, present or future market performance, nor does DTCC guarantee the adequacy, accuracy, timeliness or completeness of this Report or its fitness for any purpose. DTCC shall not be subject to any damages or liabilities whatsoever with respect to any errors, omissions or delays in this Report nor for any party s use of or reliance hereon. DTCC s First Half 2014 Annuity Market Activity Report Page 2 of 19

3 About the Analytic Reporting for Annuities Service Analytic Reporting for Annuities (Analytic Reporting) is an award winning online information service offered by The Depository Trust & Clearing Corporation s (DTCC) Insurance & Retirement Services (I&RS) business. The service delivers data from millions of annuity transactions processed through and submitted to I&RS for insurance companies and broker/dealers, providing users with an in-depth and comprehensive view of the annuity marketplace with a particular concentration on non-proprietary distribution. In H114, nearly $104 billion in annuity transactions were processed by, or otherwise submitted for inclusion in Analytic Reporting to, I&RS as follows: 120 insurance company participants (representing 44 parent/holding companies) 583 distributors* 3,463 annuity products *The number of distributors represented in the Analytic Reporting database has increased by more than 400 due to the addition of the new Analytic Reporting Full Coverage feature. This complementary feature allows for the inclusion of annuity and life transaction data, even though the underlying transactions were not processed through DTCC. If you would 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 First Half 2014 Annuity Market Activity Report Page 3 of 19

4 Executive Summary DTCC s H114 Annuity Market Activity Report showcases our extensive repository of transactional information to provide a compelling overview of the market for annuity products. The report compares numerous points in time across many data elements including: cash flows, products, insurance carriers, distributors, variable and fixed annuities, account types and geography. Fixed annuity sales driving inflows and net flows A H114 cash flow summary shows inflows are up 21% over H113; conversely outflows increased by 22%, resulting in a minimal increase in net cash flows for this period. Annuity inflows reached their peak over the last year in March and April 2014, climbing to $9.7 billion; this resulted in an increase of over 34% from March 2013 and 20% from April Net flows increased significantly, from $1 billion to $2.7 billion, in Q214 over Q114 resulting in an increase of 150%. The positive movement we are seeing in inflows and net flows in H114 is directly related to an increase in the sale of fixed annuity products. Fixed annuity inflows and net flows in the first half of 2014 were up 130% and 150% compared to the same period in 2013.Variable annuity inflows increased 3% and there was a large drop in net flows by 74%. A review of the type of accounts being used for Annuity products shows qualified accounts continue to command a larger share of inflows than non-qualified accounts. Net flows in non-qualified accounts remained in negative territory, while net flows in qualified accounts saw a dramatic increase in H114 after a steady decline from August to December Positive cash flow ratios reside with a select few Distributors We continue to see a segmented view of the distributor landscape in terms of the current cash flow ratio for each of the participants. There are a small number of distributors with positive net flows and even fewer with high net flows. From an inflow perspective the top ten distributors continue to account for the lion s share in H114 and H113, with little change year-over-year in the overall landscape of the players. From a geographic perspective, inflow activity has been consistent with the majority of the same ten states, accounting for more than half of all inflows in H114 and H113. Despite shifts in the carrier landscape, the top ten command the majority of inflows and net flows As the landscape of the top insurance / holding companies continues to evolve, there were some significant changes in the carrier rankings when comparing H113 to H114. This includes Prudential dropping from the third spot to the seventh, Met Life dropping from eighth to 13 th and AXA falling to 12 th. Jackson National and Lincoln remained at the first and second spots, respectively, and Allianz and NY Life joined the top 10. Even with the shifts, the top 10 carriers captured 78% of total inflows in H113 and H114. The net flow picture tells a similar story with the top 10 carriers accounting for almost 90% of total positive net cash flows. DTCC s First Half 2014 Annuity Market Activity Report Page 4 of 19

5 Top products continue to dominate inflows and net flows As we saw with the carrier rankings there were shifts year-over-year in the top 10 products ranked by inflows. Regardless of the changes, the top 10 continue to capture about a third of all inflows. Jackson National s Perspective and Elite Access products continue to dominate the Annuity product market in terms of inflows and net flows. DTCC s First Half 2014 Annuity Market Activity Report Page 5 of 19

6 H114 Market Summary Cash Flows Inflows into annuity products processed or stored by I&RS were $53.7 billion, up 21% in H114 from H113, but out flows increased by 22%, resulting in a minimal increase in net cash flows. Annuity Cash flows First Half Comparison (2014 vs. 2013) DTCC s First Half 2014 Annuity Market Activity Report Page 6 of 19

7 Annuity inflows spiked to $9.7 billion in both March and April 2014, an increase of over 34% from March 2013 and 20% from April Net flows increased significantly (from $1 billion to $2.7 billion) in Q214 over Q114, resulting in an increase of more than 150%. This is a vastly different picture when comparing the same time periods (Q113 over Q213) in 2013, while an increase in net flows was realized, it was less than half at 62%. Annuity Cash flows January June 2014 vs January June 2013 DTCC s First Half 2014 Annuity Market Activity Report Page 7 of 19

8 There was an increase of more than 130% in Fixed Annuity inflows for the first half of 2014 compared to the same time period in 2013 along with a 150% increase in net flows. This is a sharp contrast to Variable Annuity inflows which saw a 3% increase in inflows and a large drop in net flows (74%). Variable & Fixed Annuity Products Cash flows Comparison January June 2014 vs January June 2013 DTCC s First Half 2014 Annuity Market Activity Report Page 8 of 19

9 The difference in the share of annuity inflows going into qualified and non-qualified accounts began widening at the start of 2014 after a gradual decline in the second half of Overall, the ratio of inflows into qualified and non-qualified accounts remains steady at 56% and 44%, respectively. DTCC s First Half 2014 Annuity Market Activity Report Page 9 of 19

10 In H114, net cash flows in non-qualified accounts remained in negative territory totaling just over $2.5 billion. Meanwhile, after a steady decline in net flows into qualified accounts from August to December 2013, there has been a dramatic increase from January to June 2014, peaking in May at $1.5 billion. DTCC s First Half 2014 Annuity Market Activity Report Page 10 of 19

11 H114 Landscape of Distribution In the first half of 2014 the national view of the distribution market shows there are a small number of distributors with positive net cash flows and even fewer with high net cash flows. This view from Analytic Reporting can be extremely useful for individual carriers, as they can compare their own current cash flow ratios by distributor to national benchmarking information as well as gain a better understanding of where they stand in relation to others in their peer group/competitors. Analysis of inflows, out flows and net cash flows yields a view of each distributor s current cash flow ratio DTCC s First Half 2014 Annuity Market Activity Report Page 11 of 19

12 The top 10 distributors accounted for more than 66% of all inflows in H114 slightly down from 68% in H113. There was little change year-over-year in the overall landscape of the top players. DTCC s First Half 2014 Annuity Market Activity Report Page 12 of 19

13 Geographic View of Market Activity A unique offering of Territory Management The top 10 states accounted for more than half of the total inflows in H114 and H113. The overall share of inflows attributed to the top 10 states increased slightly from 55% in H113 to 56% in H114. Year-over-year the majority of inflows are coming from the same nine states. H114 Top States Ranked by Inflows ($B) H113 Top States Ranked by Inflow ($B) Rank State Market Share Rank State Market Share 1 California 11.3% 1 California 10.1% 2 New York 7.7% 2 Florida 7.4% 3 Florida 7.6% 3 New York 7.3% 4 Texas 6.8% 4 Texas 6.4% 5 Pennsylvania 4.8% 5 Pennsylvania 5.2% 6 New Jersey 4.7% 6 Ohio 4.3% 7 Ohio 4.0% 7 New Jersey 4.3% 8 Illinois 3.3% 8 Michigan 3.8% 9 Michigan 3.2% 9 Illinois 3.5% 10 North Carolina 2.9% 10 Massachusetts 2.4% * State information is based on the owner/annuitant. 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. DTCC s First Half 2014 Annuity Market Activity Report Page 13 of 19

14 Overview of Insurance / Holding Companies The top 10 insurance / holding companies ranked by inflows captured almost $42 billion, or more than 78%, of total inflows in H114. This is comparable to H113 when the top 10 companies accounted for lower inflows ($35 billion), but the same percentage of total inflows of 78%. Insurance / holding companies - Inflows The data show some significant changes in the carrier ranking landscape comparing H113 to H114 that includes Prudential dropping from the third ranking to the seventh, Met Life dropping from eighth to 13 th and AXA falling to 12 th. Jackson National and Lincoln remained at first and second, respectively, and Allianz and NY Life joined the top 10. Top Insurance / holding companies Ranked by Inflows H114 Rank Holding Company H114 Market Share Inflows ($B) 1 Jackson National Life Insurance Co $ % 2 Lincoln National Corporation $ % 3 American International Group, Inc. $ % 4 Allianz SE $ % 5 Aegon NV $ % 6 Nationwide Financial Services $ % 7 Prudential Financial $ % 8 Pacific Life $ % 9 Ameriprise Financial Services Group, Inc. $ % 10 New York Life $ % DTCC s First Half 2014 Annuity Market Activity Report Page 14 of 19

15 Top Insurance / holding companies Ranked by Inflows H113 Rank Holding Company H113 Market Share Inflows ($B) 1 Jackson National Life Insurance Co $ % 2 Lincoln National Corporation $ % 3 Prudential Financial $ % 4 American International Group, Inc $ % 5 Aegon NV $ % 6 -Nationwide Financial Services $ % 7 Pacific Life $ % 8 Met Life $ % 9 Ameriprise Financial Services Group, Inc $ % 10 AXA SA $ % Insurance / holding companies - Net flows The top 10 insurance / holding companies ranked by net cash flows accounted for more than $19 billion in positive net flows in H114, which represents almost 90% of total positive net flows in the first half of This is up from H113 when the top 10 accounted for net cash flows just over $15 billion. Twenty-five insurance parent/holding companies had positive net flows totaling $21.4 billion while nineteen experienced negative net flows totaling over - $17.7 billion. Top Insurance / holding companies Ranked by Net flows H114 Rank Holding Company H114 Net flows ($B) 1 Jackson National Life Insurance Co $7.2 2 Allianz SE $3.1 3 American International Group, Inc $2.3 4 Lincoln National Corp $1.7 5 Ameriprise Financial Services Group $1.2 6 Forethought Financial Group $0.9 7 Nationwide Financial Services $0.9 8 American Financial Group $0.7 9 Symetra Financial Corp $ Mass Mutual Life Insurance Co $0.6 DTCC s First Half 2014 Annuity Market Activity Report Page 15 of 19

16 Top Insurance / holding companies Ranked by Net flows H113 Rank Holding Company H113 Net flows ($B) 1 Jackson National Life Insurance Co $6.1 2 Lincoln National Corp $2.3 3 Ameriprise Financial Services Group $1.8 4 Prudential Financial $1.8 5 Protective Life Corp $0.8 6 Nationwide Financial Services $0.6 7 New York Life $0.6 8 Allianz SE $0.4 9 Ohio National Financial Services $ Aegon NV $0.3 Sixteen of the 44 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 First Half 2014 Annuity Market Activity Report Page 16 of 19

17 Product Inflows and Net flows During H114 annuity products saw some shifts in the products that are in the top 10 over the last year, despite this fact the top products continue to capture almost a third (32.9%) of all inflows. Over the last year Jackson National s Perspective and Elite Access products accounted for the lion s share of the top 10 inflows; this is especially evident in H114 where their share of the market was 53% of the inflows. Top Annuity Products Ranked by Inflows H114 Rank Product Carrier H114 Inflows ($B) Market Share of all Inflows 1 Perspective II 05/05 Jackson National $ % 2 Perspective L-Series Jackson National $ % 3 RAVA5 Advantage Variable Annuity Ameriprise $ % 4 Allianz 360 Fixed Annuity Allianz $ % 5 Polaris Platinum III AIG $ % 6 Elite Access Jackson National $ % 7 Pru Premier Retirement VA B Series Prudential $ % 8 NYL Secure Term MVA Fixed Ann II New York Life $ % 9 Perspective II 04/14 Jackson National $ % 10 Nationwide Destination B 2 Nationwide $ % Top Annuity Products Ranked by Inflows H113 Rank Product Carrier H113 Inflows ($B) Market Share of all Inflows 1 Perspective II 05/05 Jackson National $ % 2 RAVA5 Advantage Variable Annuity Ameriprise $ % 3 Prospective L-Series Jackson National $ % 4 Pru Premier Retirement VA B Series Prudential $ % 5 USA Series VA Met Life $ % 6 Choice Plu Assurance B Class Lincoln National $ % 7 Elite Access Jackson National $ % 8 Pru Premier VA L Series Prudential $ % 9 Choice Plus Assurance L Share Lincoln National $ % 10 Polaris Platinum III AIG $ % DTCC s First Half 2014 Annuity Market Activity Report Page 17 of 19

18 In H114 the top 10 annuity products ranked by net flows captured more than $14.5 billion in positive net flows. This is a 14.5% decrease from H113 where they accounted for over $16.3 billion. As is the case with inflows, Jackson s National s Perspective and Elite Access products continue to have a strong hold on the large percentage of net flows they account for in the top 10. Of the 3,463 annuity products for which I&RS processed or stored transactions in H114: 723 products had positive net flows totaling $43.2 billion 2,740 products had negative net flows totaling -$39.5 billion Additionally, 86 of the products had more than $100 million in positive net flows 19 of the products had more than $500 million in positive net flows 6 products had more than $1 billion in positive net flows Top 10 Annuity Products Ranked by Net flows H114 Rank Product Carrier H114 Net flows ($B) 1 Perspective II 05/05 Jackson National $ RAVA5 Advantage Variable Annuity Ameriprise $ Perspective L-Series Jackson National $ Allianz 360 Fixed Annuity Allianz $ Elite Access Jackson National $ Polaris Platinum III AIG $ NYL Secure Term MVA Fixed Ann II New York Life $ Perspective II 04/14 Jackson National $ Nationwide Destination B 2 Nationwide $ Transamerica B Share Aegon $0.83 DTCC s First Half 2014 Annuity Market Activity Report Page 18 of 19

19 Top 10 Annuity Products Ranked by Net flows H113 Rank Product Carrier H113 Net flows ($B) 1 Perspective II 05/05 Jackson National $ RAVA5 Advantage Variable Annuity Ameriprise $ Pru Premier Retirement Variable Annuity Prudential $ Perspective L Series Jackson National $ Elite Access Jackson National $ Choice Plus Assurance B Class Lincoln National $ Pru Premier Retirement VA L Series Prudential $ Polaris Platinum III AIG $ USA Series VA Met Life $ Vision Basic Allianz $0.75 If you would 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. Follow us on Join us on LinkedIn: DTCC Insurance & Retirement Services About DTCC With over 40 years of experience, DTCC is the premier post-trade market infrastructure for the global financial services industry. From operating facilities, data centers and offices in 15 countries, DTCC, through its subsidiaries, automates, centralizes, and standardizes the post-trade processing of financial transactions, mitigating risk, increasing transparency and driving efficiency for thousands of broker/dealers, custodian banks and asset managers worldwide. User owned and industry governed, the firm simplifies the complexities of clearing, settlement, asset servicing, data management and information services across asset classes, bringing increased security and soundness to the financial markets. In 2013, DTCC s subsidiaries processed securities transactions valued at approximately US$1.6 quadrillion. Its depository provides custody and asset servicing for securities issues from 139 countries and territories valued at US$43 trillion. DTCC s global trade repository processes tens of millions of submissions per week. To learn more, please visit or follow us on DTCC s First Half 2014 Annuity Market Activity Report Page 19 of 19