Fastest-Growing Companies in Annuity Market Aren’t Necessarily Largest Ones |
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Written by U. S. Insurance News
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Monday, 09 June 2008 |
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The largest companies in the annuity industry aren’t necessarily the fastest-growing ones.
A new study from Conning Research and Consulting, “The Annuity
Industry’s Fast Growers: Prospering in a Scale-Driven World,” shows
that while the annuity industry is dominated by the 20 largest
companies—which earned 81 percent of all individual annuity net
premiums in 2007—less than half of those 20 largest firms are also
among the fastest-growing companies in the market.
"While premium scale is always important, it is not by itself a clear indication of competitive ability,” explained Scott Hawkins, an analyst with Conning. “In fact, of the 20 fastest-growing companies identified in this study, only seven are also in the list of the largest 20 companies in the market.”
Hawkins pointed out that with the market trending to variable annuities and the asset management fees they generate, retention of business is especially important.
Stephan Christiansen, director of research at Conning, said one fact that jumped out to the researchers is that the fastest-growing companies in the annuity market are willing to pay for growth.
“For example, the Fast Grower companies pay higher commission rates, but also get higher productivity from their distributors,” Christiansen said. “Paying for that growth has compressed margins for this group, but their higher net flows should ultimately allow them to spread these costs over a larger asset base producing better long-term returns.”
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