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Prudential Joins AIG Taking Annuities Share From MetLife

Prudential Joins AIG Taking Variable-Annuity Share From MetLife
Sales at bailed-out insurer American International Group Inc. jumped 22 percent to $2.34 billion, increasing its share of the market to 6.1 percent. Photographer: JB Reed/Bloomberg

Prudential Financial Inc. and American International Group Inc. grabbed a bigger share of the U.S. variable-annuity market as MetLife Inc. reduced sales of the equity-linked retirement products.

Prudential, the top seller of variable annuities this year, boosted its market share to 14 percent in the second quarter from 11 percent a year earlier as sales rose 18 percent to $5.35 billion, according to data released today by trade group Limra. Sales at bailed-out insurer AIG jumped 22 percent to $2.34 billion, increasing its share of the market to 6.1 percent.

“Sales benefited from actions taken by several key competitors that made our products relatively more attractive,” Mark Grier, vice chairman of Newark, New Jersey-based Prudential, said on an Aug. 2 conference call with analysts. “We are comfortable with our sales level.”

U.S. second-quarter sales of variable annuities fell about 4.9 percent from a year earlier to $38.6 billion, Limra said. MetLife, the largest U.S. life insurer, scaled back sales while Hartford Financial Services Group Inc., Genworth Financial Inc. and Sun Life Financial Inc. are retreating from the products.

Variable-annuity sales at New York-based MetLife fell 34 percent to $4.61 billion from a year earlier, cuttings its portion of the market to 12 percent from 17 percent. MetLife was the third-largest seller of the products in the second quarter. Jackson National, a U.S. unit of Prudential Plc, the U.K.’s biggest insurer, was second with sales of $5.26 billion.

MetLife’s Strategy

MetLife Chief Executive Officer Steven Kandarian is focusing on emerging-market growth and sales of accident and health protection in the U.S. MetLife and Prudential Financial have lowered some guarantees and changed policy terms to limit risk.

AIG introduced a variable annuity this year with an investment option designed to limit market swings and fees tied to volatility, which has reduced risk, Jay Wintrob, CEO of AIG’s SunAmerica life unit, said on an Aug. 3 conference call with analysts.

“Sales growth was driven by our new product,” Wintrob said. “You should expect us to continue managing risk through product design and redesign and maintaining an effective hedging program.”

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