American International Group Inc. (AIG) topped MetLife Inc. (MET) in U.S. annuity sales for the first time since 2008 as Chief Executive Officer Robert Benmosche regains market share lost by his predecessors in the financial crisis.
AIG sold $3.9 billion of the retirement products in the second quarter, while MetLife’s figure was $3.1 billion, according to data today from industry group Limra. London-based Prudential Plc (PRU)’s Jackson National was the top provider, with $6.4 billion of sales. The industrywide total fell to $56.5 billion from $57.3 billion a year earlier.
Benmosche is increasing sales to consumers at New York-based AIG after repaying a government bailout last year. At MetLife, the largest U.S. life insurer, CEO Steve Kandarian is scaling back from capital-intensive businesses such as annuities while focusing on growth in emerging markets and from accident and health products.
“Variable-annuity sales continue to be strong as others struggle with what to do with that business,” Benmosche, 69, said on a conference call with analysts this month.
Annuities can help retirees secure a stream of lifetime income. In variable annuities, account values can change based on fluctuations in stocks and bonds, and some insurers sold the contracts with a guarantee that the values would rise over time.
Those promises burned insurers when stocks crashed in the financial crisis, and companies including Hartford Financial Services Group Inc. (HIG) and Sun Life Financial Inc. have retreated from the business.
Prudential Financial Inc. (PRU), the No. 2 seller of individual annuities last year, fell to sixth in the three months ended June 30, with sales of $2.6 billion. The Newark, New Jersey-based company reduced some guarantees on the products to help margins, Prudential Vice Chairman Mark Grier said on a conference call with analysts.
MetLife was the No. 3 seller of annuities in 2012 and fell to No. 5 in the second quarter. The New York-based company has cut benefits on new products and scaled back its adviser force by a third.
“This quarter’s results reflect the continuation of our strategic shift away from capital-intensive market-sensitive products,” Kandarian said on a conference call with analysts this month to discuss second-quarter earnings.
MetLife slipped 1.4 percent to $47.61 at 4:03 p.m. in New York. The company has rallied 45 percent this year, compared with the 31 percent gain at AIG.
Lincoln National Corp. (LNC) jumped from the No. 5 seller last year to No. 2 in the second quarter, with sales of $4.6 billion.
AIG cut some guarantees tied to its variable annuities beginning in 2010, and sold fewer of the policies in the past than some rivals, said Jay Wintrob, CEO of AIG’s life insurance unit.
“The combination of a relatively small legacy block and enhanced risk control in our current features has allowed us to capitalize on opportunities when competitors have chosen, or been forced, to pull back,” Wintrob said on the Aug. 2 conference call with analysts.
Once the world’s largest insurer, AIG was leading in U.S. annuity sales for the first nine months of 2008 before the company was hobbled by losses on mortgage bets. In the third quarter of that year, AIG posted $5 billion, compared with $4.5 billion at MetLife.
In September 2008, AIG received a U.S. bailout that swelled to as much as $182.3 billion. The insurer repaid taxpayers in December 2012.
To contact the editor responsible for this story: Dan Kraut at Dkraut2@bloomberg.net