Industry News Giant

Insurance Deal Gets Scrapped

- The deal to sell AIG's Asian AIA unit to Prudential UK has collapsed and was rejected by AIG after a proposed $5B cut in the purchase price, from $35.5B to $30.375B. Prudential was forced to lower their bid price in order to calm a rebelion among shareholders who felt the price was too high. AIG's board rejected the offer against the urging of CEO Robert Benmosche, who was in favor of completing the deal even for the lower price. Pru UK will be responsible to pay AIG a $230M termination fee.

FINRA Head Calls for Scrutiny

-  FINRA Chairman Richard Ketchum, speaking at an annual conference last week, called on financial services companies to carefully review sales involving money that came from an inheritance or a retirement plan cashout. After instituting a VA sales practices rule in 2008, FINRA claims it has discovered that many companies are not paying sufficient attention to the financial situations, liquidity needs, and risk tolerance of investors. These issues can be magnified when a person inherits a large sum of cash, termed a "wealth event." FINRA is urging companies to take advantage of these opportunities with clients, not solely as a way to enhance revenue, but to also use it as an opportunity to focus on the client's situation and product suitability.

Rating Agency Warms to Lincoln National

- Lincoln National has taken several steps in the right direction, according to Moody's Investors Service, who has changed their outlook on the company from Negative to Stable. Moody's is still concerned about the commercial real estate investment exposure and the number of VA guarantees still outstanding but has been pleased with the recent short-term financing and liquidity positions of the company and the amount of capital Lincoln has raised.


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 Insurance

Recent News:

Prudential Announces Term Repricing

- On June 14th, Prudential's Term Essential and Term Elite rates will be decreased at some key ages and underwriting categories. Term Essential 2010 will offer top quartile competitiveness for 15 and 20-year term at ages 55-65, 20 and 30 year term at ages 45-55, policies at higher issue ages, and policies with face amounts of $1 million and up. The advantage for Term Elite is that it offers a very attractive conversion credit during the first five policy years.

Sun Life Introduces a New Current Assumption UL

- Sun Life Financial has recently introduced a new current assumption UL product designed primary for cash accumulation sales called Sun AccumULator. The product offers a 4.75% current interest crediting rate, Return of Premium Death Benefit Option, Persistency Interest Bonus Credit and an Account Value Enhancement Benefit Rider used for high early cash value sales designs.

Hartford Reprices No-Lapse Guarantee Products

- Hartford Life has announced price increases on their single-life and survivor NLG products that will be effective July 1, 2010. With the new pricing, Hartford has also enhanced their illustration software with a feature that will calculate the Policy Protection Premium or Policy Protection Face Amount for four different Policy Protection Periods (To Age 120, To Age 105, To Age 100, and To Age 95) This functionality gives the user a snapshot of the results under these alternate periods. Analysis of these changes will be available in a future edition of WIFR.  

Principal Financial Adds a Surrender Value Endorsement Rider to VUL

- Principal Life has added a Surrender Value Enhancement Rider to its VUL Income II product. The SVE Rider provides the potential for high early cash values by enhancing the net cash surrender value of the policy and reducing surrender charges during the first seven years. The rider is being targeted to business owners in Executive Bonus, Key Person, Split Dollar, and Premium Financing cases.

National Life Announces Pricing Changes to their IUL Products

- National Life and Life Insurance of the Southwest have announced changes to lower the participation, cap, credited rates and maximum illustrated rates on their IUL products previously announced on May 18, 2010 will not be going into effect. The rates will revert to the rates that were in effect for the May 21, 2010 sweep date. The companies, noting rate-setting difficulties over the last 18 months due to constantly changing economic conditions, has indicated it has made adjustments to its rate-setting methodology which should help smooth future fluctuations.

North American Company Upgrades IUL Product

- North American Company for Life and Health Insurance has launched its latest version of Builder IUL.  Several index selections are available to meet clients' needs and the policy will never credit less than zero percent, guaranteeing downside protection in a poorly performing market. Both variable and standard loan rates are available. Net zero cost standard loan rates are available starting in policy year six.

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Recent News:

Beacon: Fixed Annuity Premium Down 52%

- Beacon Research has released its First Quarter 2010 Fixed Annuity Premium Study, and data indicates sales are down a whopping 52% from the same time last year. Since first quarter 2009 was a record setting quarter, large decreases in all product lines were seen: MVAs were down 80%, BVAs down 64%, Income Annuities declined 6% and Indexed Annuities showed the narrowest decline at only 5%. The top sales position was taken by New York Life, who knocked Western National off its perch down to fourth. NYL also led in book value sales, and their Preferred Fixed Annuity product was the bestseller in the bank distribution channel.

Stranger-Originated Annuities: It's About More Than Annuities

- The battle over stranger-originated annuities is part of a larger battle over the insurance product resale market. Members from the American Council of Life Insurers and the Life Insurance Settlement Association appeared Thursday at a Stranger-Originated hearing organized by the Life Insurance & Annuities Committee at the National Association of Insurance Commissioners. Originators of STOA transactions persuade people with short life expectancies to buy annuities with guaranteed minimum death benefits, with the death benefits going to the originators or other parties. Cande Olsen, chair of the Life Products Committee at the American Academy of Actuaries testified that letting STOA transactions continue could hurt all buyers of variable annuity contracts that include guaranteed minimum death benefits, by increasing insurer GMDB costs.

LIMRA: Guaranteed Riders Remain Popular With VA Buyers

- LIMRA's Variable Annuity Guaranteed Living Benefit Election Tracking Survey has found GLBs are still a vital part of consumers' retirement security. Overall, GLBs were elected 87%, when offered, during first quarter 2010. This rate is slightly down from the 2009 rate of 89%. The Bank Distribution Channel shows the highest election rate at 91%, and the Career Distribution Channel the lowest at 73%.