Third quarter experiences shift in rider market share, as GMIB riders jump five percentage points
WINDSOR, Conn., Dec. 5, 2011 — For the third consecutive quarter, the guaranteed living benefits (GLB) riders were elected 88 percent of the time (when offered), according to LIMRA’s third quarter 2011 annuity study.
“Consumers continue to choose GLBs to ensure their retirement security,” said Jafor Iqbal, associate managing director, LIMRA Retirement Research. “We noted a significant shift in rider market share this quarter. While guaranteed lifetime withdrawal benefit (GLWB) riders continues to be the most popular rider, making up 57 percent of the market, it dropped four percentage points from prior quarter and eight percentage points from two quarters ago. We attribute this to a single company’s growing market share, whose product offered a guaranteed minimum income benefit (GMIB) rider.”
GMIB riders were elected 27 percent of the time an increase of five percentage points from prior quarter; while, guaranteed minimum accumulation benefit (GMAB) and guaranteed minimum withdrawal benefit each had had two percent market share in the third quarter of 2011.
LIMRA estimates that in the third quarter of 2011, GLBs were elected in contracts representing $25.2 billion, out of $28.7 billion new deferred VA premium where GLB was available. With the third quarter experiencing significant market losses, VA assets with GLB riders decreased eight percent from $575 billion in the second quarter 2011 to $530 billion at the end of the third quarter of 2011. However, they are still 19 percent higher than in the third quarter of 2010. Total VA assets reached $1.51 trillion at the end of third quarter of 2011, a decline of three percent from $ 1.46 trillion for the same period in 2010.
GLB election rates were at 91 percent in the bank and wirehouse channels, while the career channel continues to climb, growing one percentage point to reach 79 percent in the third quarter. Rates of election for GLB slipped one percentage point in the independent channel, to 90 percent.
LIMRA’s Variable Annuity Guaranteed Living Benefit Election Tracking Survey collects VA GLB sales, election rates and assets on a quarterly basis. The 23 survey participants represent 96 percent of third quarter 2011 industry sales in which a GLB was elected.
LIMRA is a worldwide research, consulting and professional development organization that helps more than 850 insurance and financial services companies in 73 countries increase their marketing and distribution effectiveness. Visit LIMRA at www.limra.com.