New York Life Adds Variable-Annuity Guarantee as Rivals Retreat

New York Life Insurance Co., the largest U.S. life insurer owned by policyholders, is offering guaranteed payments linked to variable annuities even as competitors retreat from selling the retirement products.

New York Life customers can invest the cash backing the guaranteed income in mutual funds to benefit from stock-market rallies, without risking a guaranteed payment stream even if shares crash, Matthew Grove, head of the New York-based firm’s annuities business, said today.

The insurer is expanding in variable annuities as the exit of some rivals and decisions by others to scale back has made the market less competitive, Grove said. Prudential Financial Inc. (PRU), the largest variable-annuity provider, stopped accepting contributions from holders of contracts with certain guarantees last week, while Aegon NV (AGN)’s Transamerica is offering to pay some customers to give up guarantees.

“We feel now that the market is in a place where we can enter with a responsibly priced product, a product that we feel good about,” Grove said by phone. “If equity markets go up or if interest rates go up, we think that you’re going to have more income upside with our contract than you’d have with competitors.”

New York Life began offering variable annuities with guaranteed annual payouts in August and is training its agents to increase product sales, Grove said. The company sold $1.3 billion in variable annuities in the first six months of this year, making it the 13th-largest provider, according to trade group Limra. Prudential, based in Newark, New Jersey, sold $10.3 billion.

To contact the reporter on this story: Zachary Tracer in New York at ztracer1@bloomberg.net;

To contact the editors responsible for this story: Dan Kraut at dkraut2@bloomberg.net;