Magazine article American Banker

Nationwide's 3Q Variable Sales Fell as Fixed Revived

Magazine article American Banker

Nationwide's 3Q Variable Sales Fell as Fixed Revived

Article excerpt

A precipitous drop in variable annuity sales left Nationwide Financial Services Inc.'s third-quarter overall annuity sales through banks down 18% from the second quarter.

The Columbus, Ohio, insurer had $756 million of annuity sales through banks in the third quarter, down 23% from the year earlier.

Variable annuity sales in the quarter were $273 million, down 50% from the second quarter, though the sales number was still up 5% from the year earlier, when variable annuity sales were in the doldrums industrywide. The company's fixed annuity sales rose from the second quarter.

Kenneth Kehrer, the president of the Kenneth Kehrer Associates consulting firm in Princeton, N.J., said that variable annuity sales were generally lower in banks in the third quarter. Kehrer Associates tracks bank annuity sales and expects to issue its third-quarter study next week.

However, he said, it seems banks' variable sales dropped because many variable annuity providers limited how much of a customer's investment could go into fixed subaccounts within the product. Other variable annuity providers canceled the fixed buckets in the variable products.

"Essentially, a good part of variable annuity sales for the last six months went into fixed buckets," Mr. Kehrer said. "About half of the money that went into bank-sold variable annuities went into fixed buckets. Generally, in banks, fixed subaccounts have had a significant share of deposits.

"Banks are a fixed environment, even when the stock market is hot. Sometimes the fixed subaccounts make up 20% to 30% of VA sales, but sometimes it goes up higher like it was last fall when it was over 60%," Mr. Kehrer said.

Nationwide was one company that restricted the fixed buckets, said Matt Riebel, the president of Financial Institution Distributors Agency Inc., the Nationwide unit that distributes through banks. …

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