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Individual index annuities move Jackson National to top of Q3 rankings

A surge in ordinary annuity premiums and considerations lands Jackson National at the top of the third-quarter U.S. annuity rankings.

Jackson National's ordinary — commonly referred to as individual annuity premiums and considerations jumped to $5.58 billion in the third quarter, almost 50% higher than the prior-year quarter. The large increase in individual annuity considerations pushed the Prudential PLC subsidiary's total considerations up 34.2% to $5.78 billion for the quarter.

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Jackson National, which has been a top writer in the U.S. variable annuity market for several years, began to diversify its annuity portfolio in 2019. A mixture of new product introductions in the fixed index annuity space and a slowdown of new sales in variable annuities shifted its new business mix, Prudential CFO and COO Mark FitzPatrick said during a Sept. 26 investor day call.

A review of sales survey data collected by LIMRA shows that sales of variable annuities accounted for 66% of Jackson National's third-quarter individual annuity sales mix, compared to more than 95% in the third quarter of 2018.

Jackson National's year-over-year variable annuity sales fell 8% to $3.77 billion, while its nonvariable products jumped to $1.97 billion from only $168 million in the third quarter of 2018. Of the nonvariable total sales, $1.33 billion were in fixed index annuity and $640 million were in fixed annuities.

Nationwide Mutual Group, Aegon NV's U.S.-based Transamerica, Allianz Group's U.S. subsidiaries and MetLife Inc. also logged double-digit year-over-year increases in individual annuity premiums and considerations during the third quarter.

Athene Holdings Ltd. recorded the biggest year-over-year change among the largest annuity writers in the third quarter, driven by growth in its group annuity premiums and considerations. Athene's group considerations increased more than fivefold to $2.60 billion as it closed a pension risk transfer transaction with Bristol-Myers Squibb Co.

President William Wheeler said year-to-date pension risk transfer transactions have been strong for Athene in 2019, with the company closing more than $5 billion in deals. He said the volume is almost twice that of the same period in 2018, according to a quarterly earnings call transcript.

However, Wheeler sought to temper expectations for the fourth quarter, saying it is "typically seasonally strong" for such transactions but that "activity will normalize in the near term coming off the third-quarter high."

Prudential Financial Inc., on the other hand, saw group considerations fall to $2.42 billion in the third quarter from $4.56 billion in the prior-year quarter. The company did not close any funded pension transfer deals during the quarter, but "the fourth quarter has started well" with a strong pipeline of pending transactions, Vice Chairman Robert Falzon said during an earnings call in November.

Baxter International Inc. agreed to transfer approximately $2.4 billion in pension plan liabilities to Prudential Insurance Co. of America. Baxter expected the purchase of the group annuity to occur by Oct. 11.

In aggregate, industry group considerations hit $37.26 billion during the third quarter, 7.2% higher than the prior-year quarter.

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Individual annuities refer to fixed and variable annuities and is reported as ordinary within NAIC statutory statements. Group annuities include investment options typically available in tax-advantaged savings accounts and guaranteed investment contracts.

S&P Global Market Intelligence uses statutory total annuity considerations to determine market share. Total annuity consideration is a preferred indicator of market share as it not only reflects new business but also the persistence of a company's existing business in the form of renewal annuity considerations. Additionally, many policyholder acquisition costs are not recovered within one year. As such, total annuity considerations can also be a better indicator of profitability for life insurers, whereas new sales do not necessarily equate with profitability.