Press Release

Sep 04, 2013 • Press Releases

DTCC Reveals Key Trends in the Annuities Markets for 1st Half of 2013

New York, NY, September 4, 2013 -- The Depository Trust & Clearing Corporation’s (DTCC) Insurance & Retirement Services - (I&RS) business has released its Annuity Market Activity Report covering findings on activity and trends in the market for annuity products in the first half of 2013. The data provided in the report includes top insurance/holding companies by inflow, as well as the top annuity products. The top ten companies accounted for over $15 billion in positive net flows.

In the first half of 2013, more than $85 billion in annuity product transactions were processed by DTCC’s National Securities Clearing Corporation (NSCC) subsidiary for:

  • 112 insurance company participants (representing 43 parent/holding companies)
  • 128 distributors
  • 3,236 annuity products

The transactions processed provide a view of a broad range of broker/dealers with a particular concentration in non‐proprietary distribution.

The information in the Annuity Market Activity Report is based on data obtained from the millions of transactions processed by DTCC’s National Securities Clearing Corporation (NSCC) subsidiary for I&RS clients and available to subscribers of its online Analytic Reporting for Annuities information service. I&RS is connected to over 450 distribution and carrier firms representing product segments including life insurance, fixed and variable annuity products and distribution channels including banks, Brokerage General Agencies, Insurance Marketing Organizations and Insurance Broker Dealers.

Of note in the six month period include shifts in activity in the annuities market between May and June. Annuity inflows processed in June decreased by 9.7% to $7.2 billion from $7.9 billion in May. Although the number had decreased from May to June, inflows increased by 3.4% compared to June 2012. Out flows (annuity contract terminations) for the month also decreased by 11.7% compared to May, from $7.3 billion in May to $6.4 million in June. Net flows increased by 12% to $780 million from $697 million.

Key Takeaways

Providing data by type of account, data from Analytic Reporting for Annuities reveals that:

  • IRA accounts attracted 44.9% of all inflows in June, while non-qualified accounts attracted 44.4% of inflows.
  • 401K accounts attracted 5% of inflows and other qualified account attracted 5.7%.
  • Non-qualified accounts experienced negative net cash flows of more than $143 million in June compared to IRA accounts, which experienced positive net cash flows of more than $817 million for the month, as shown here:

The ability to analyze inflows, out flows and net cash flows from the data obtainable through Analytic Reporting, yields a view of each distributor’s current cash flow ratio. As can be seen in the below scatter chart, on a national level the data shows that a relatively small number of distributors have high net cash flows resulting from high inflows and low out flows. This same analysis can be performed for each insurance company, resulting in a significantly different view, providing an opportunity for benchmarking against the industry.

From the Territory Management feature of Analytic Reporting for Annuities, the report also reveals the top ten states ranked by inflows, which accounted for nearly half of all inflows. These leading states include California, Florida, New York, Texas and Pennsylvania. “Users of Analytic Reporting are able to compare this national data to their own distribution down to the zip code level to better understand their relative market performance,” observed Andrew Blumberg, group director, DTCC Insurance & Retirement Services.

About Analytic Reporting for Annuities

Analytic Reporting for Annuities is an online information solution containing aggregated data from transactions processed by Insurance & Retirement Services (I&RS), through DTCC’s National Securities Clearing Corporation (NSCC) subsidiary. I&RS is the central messaging connection for annuity and life insurance transactions, enabling insurance companies to provide broker/dealers with daily financial transaction information. It processes approximately 150 million transactions each month.

Because Analytic Reporting is based on processed transactions, not surveyed data, Analytic Reporting gives DTCC customers a unique and unprecedented view of their own business as well as the market for annuity products so that they can discover key trends and identify opportunities. With updates approximately two to three weeks after each month-end, Analytic Reporting allows users to assess their business and access industry intelligence to support management decisions about sales, sales management, marketing and product offerings. Analytic Reporting is a hosted turnkey solution, available online anywhere, anytime. DTCC customers don't have to store or manage the data, nor must they develop applications or run SQL queries to obtain the business information they rely on for decision making.

The Analytic Reporting Service is a service offering of National Securities Clearing Corporation ("NSCC"), a clearing agency registered with the U.S. Securities and Exchange Commission and wholly-owned subsidiary of DTCC. Visit http://www.dtcc.com/investment-product-services/insurance-and-retirement-services/analytic-reporting-for-annuities.aspx for more information about the Analytic Reporting Service.

About DTCC

DTCC has operating facilities and data centers around the world and, through its subsidiaries, automates, centralizes, and standardizes the post-trade processing of financial transactions for thousands of institutions worldwide. With 40 years of experience, DTCC is the premier post-trade market infrastructure for the global financial services industry, simplifying the complexities of clearance, settlement, asset servicing, global data management and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, derivatives, money market instruments, syndicated loans, mutual funds, alternative investment products, and insurance transactions. In 2012, DTCC’s subsidiaries processed securities transactions valued at approximately US$1.6 quadrillion. Its depository provides custody and asset servicing for securities issues from 131 countries and territories valued at US$37.2 trillion. DTCC’s global trade repositories record more than US$500 trillion in gross notional value of transactions made worldwide. Follow us on Twitter: http://twitter.com/The_DTCC.

For Release: Immediately

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Robin Shapiro

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