In a recent article by Darla Mercado in Investment News, “Other VA players may follow Genworth out door” she reports on the motivators behind company decisions to leave or reduce their activity in the VA market and low interest rates lead the list. Quoting Clark Troy, an analyst with Aite Group, LLC, the article states: “If we stay in a low-interest-rate environment, I wouldn’t be surprised to see more carriers pull out of or de-emphasize the issuance of variable annuities.”
One of the factors that some analysts looked to as warning signs that carriers are scaling back VAs is the lack of product development. As someone who sees a lot of products before they get filed for approval, I was particularly interested in this piece of the analysis. I too have noted that there has been a change in what my client companies are sending my way. While I know I don’t see all the products any particular company designs or submits to the states for approval, I do see a lot of products. I have anecdotally noted a clear trend towards fewer products and more specifically targeted products. In easier times, it seemed many companies could - and did - have a very large number of shelf products - “just in case.”
After a period of less product development overall, the products I see now have not only spent more time being developed, but also their place in a company’s overall portfolio seems to be more thoroughly analyzed and purposeful. I think that is a positive development. There is still plenty of pressure to get products finished and filed for approval - speed to market is certainly no less important, but there is a different tone to the whole process that I think is a good one.