New bank survey identifies ideal attributes of annuity providers
Nearly half of U.S. banks that offer annuity products to clients are planning to ‘right size’ the number of annuity providers they actively sell, and ‘financial strength’ of the annuity providers is the most important criteria for determining which are retained or added in the banks offerings, according to a new Kehrer-LIMRA survey commissioned by ING. The survey confirms that annuity providers like ING, which is ranked number 13 in the recently published Forbes 2000, should be top-of-mind as a high-potential annuity provider for large and regional U.S. banks.
“ING commissioned Dr. Kenneth Kehrer to conduct this survey to help us better understand banks’ overall expectations for annuity provider relationships, and –just as importantly— provide our banking partners and potential partners with an insightful look at annuity distribution trends across the U.S. banking industry,” said John Harline, Senior Vice President—ING Variable Annuities, Financial Institutions. Harline noted that the 32 banks and third party broker-dealers that participated in the survey account for more than 82 percent of the annuity industry’s sales through banks in 2005. “The Kehrer-LIMRA report provides bank product managers a sharply focused view of the annuity sales landscape across the industry,” Harline said.
Chad Tope, Senior Vice President—ING Fixed Annuity Sales, said the report confirms that ING’s attributes as a strong global financial services company align well with the direction the banking industry is headed with annuity distribution. Tope said that banks citing ‘financial strength’ as the top criteria for selecting annuity providers is an especially good fit with ING. “ING is among the few equity indexed annuity providers that consistently earns an A+ rating from A.M. Best,” explained Tope. He also noted that ING’s relative size, scope and diversity of businesses and services, and global customer-centric brand all match survey participants selection criteria of ‘financial strength’ and other important criteria.
“ING is widely-viewed as a premier provider of so many products that touch financial services companies and their clients,” Tope said. Through the 2nd quarter of 2006, ING annuities continued to be popular among many distributors and their clients; ING variable annuities ranked 9th in total market share in the 2nd quarter, and 5th in fixed annuity market share for the same period, according to published LIMRA and VARDS figures. ING ranks 3rd in overall annuity sales for the same period, according to recent LIMRA figures.
In addition to providers’ financial strength, banks also indicate through the survey that a commitment to bank distribution and providing a selection of annuity products that can lead to additive sales are also important criteria in decisions in right-sizing their annuity offerings.
Specific top line survey findings include:
- The typical large bank has annuity selling agreements with 21 annuity providers. The range among larger banks is from 5 selling agreements to more than 40 selling agreements.
- About half of the banks surveyed said they have the right number of selling agreements (annuity providers). While one quarter of the group plans to reduce the number of annuity providers they do business with, 22 percent plan to expand their number of relationships with annuity providers.
- In selecting which annuity providers banks will add or retain as they right-size the number, “financial strength” of each provider is the most important selection criteria, followed by “proven commitment to bank distribution” and “products that are potentially additive to sales rather than shifts from existing products.”
- Most banks do not necessarily actively sell products tied to every existing selling agreement. In many cases where selling agreements are basically inactive , banks only service customers who invested in those products earlier. In some cases, inactive selling agreements had been active at another bank that was acquired by the bank that was surveyed.
- Among the banks planning to reduce the number of annuity providers, the average current number is 30 annuity companies. Among banks planning to expand their offerings, the average number of current annuity providers is only 13 (8 fewer than the average of all banks).
Chuck Eudy, 770.980.5209, or, 770.490.6420 (mobile), or, firstname.lastname@example.org
ING is a global financial institution of Dutch origin offering banking, insurance and asset management to more than 60 million private, corporate and institutional clients in more than 50 countries. With a diverse workforce of over 115,000 people, ING comprises a broad spectrum of prominent companies that increasingly serve their clients under the ING brand.
In the U.S., the ING family of companies offer a comprehensive array of financial services to retail and institutional clients which include life insurance, retirement plans, mutual funds, managed accounts, alternative investments, direct banking, institutional investment management, annuities, employee benefits, financial planning, and reinsurance. ING holds top-tier rankings in key U.S. markets and serves over 14 million customers across the nation. For more information, visit www.ing.com.