Expanded distribution helped John Hancock's second-quarter variable annuities sales rise 28% from a year earlier, to a record $432 million.
The Boston unit of Manulife Financial Corp. of Toronto, which announced its results Wednesday, said it had overall variable annuity sales of $2.8 billion in the second quarter, 30% more than it reported for the first quarter. Sales through banks rose 26% quarter to quarter.
Fred Nicholas, the president of Hancock's bank channel distribution, said that as of June 30 the company had 29 wholesalers dedicated to bank sales, 16% more than it had a year earlier. It sells its variable annuities through 20 banks and has selling agreements with eight of the nation's top 10 variable annuity-producing banks; at midyear 2006 it had agreements with five of the top 10, he said.
"We only really entered the bank channel three or four years ago, and I think that time, and people on the ground, has allowed us to establish some credibility in this channel," Mr. Nicholas said Tuesday. "Now, we are no longer new to the marketplace. We have established Hancock as a viable distribution entity for banks that sell variable annuities."
Market turmoils has caused traditionally conservative bank investors to buy annuities, he said.
"What we have been doing as a variable annuity industry at large is underscoring the income-guarantee story," he said. "This is a benefit that only insurance companies can provide, and it is a benefit that is becoming increasingly more important to bank customers as market conditions become more uncertain." Bank investors, he said, "want lifetime income without giving up control of their asset."
Mr. Nicholas said he expects Hancock to have similar growth in the third quarter. It had a "record day" in bank sales Monday, he said.
Kenneth Kehrer, the director of Kehrer-Limra in Princeton, N.J., which tracks variable annuity sales through banks, said Hancock's sales figures are better than the industry average. Industrywide, second-quarter sales through banks rose 20% from a year earlier and 18% from the end of the first quarter, according to his firm's data.
"The advantage has swung to variable annuities" from mutual funds in recent months, Mr. Kehrer said. "We expect now, with the market turmoil, we'll see more of that."
Michael White, who heads the bank insurance consulting firm Michael White Associates, said annuities still trail mutual funds at banks overall. According to his firm's first-quarter report, annuities accounted for only 15.8% of the $5.6 billion of income generated by mutual funds and annuities at bank holding companies in the period.
Annuities have a long way to go before they will actually compete equally with mutual funds sold at banks, he said. "Mutual funds still control the larger portion of the pie," he said. "I mean, I remember a day when the movement was first to annuities at banks, but the world has changed over time, and the latest market shake-up isn't really going to change that that quickly."
Marc Costantini, the president of John Hancock Variable Annuities, said over the past three months Hancock has expanded its distribution network to include JPMorgan Chase and Morgan Stanley and expanded its product selection.
In May it added a third-generation optional living benefit rider, Income Plus for Life, which provides additional benefits for clients who defer withdrawals and who plan to take income later.
Mr. Nicholas said the company has no near-term plans to add more wholesalers dedicated to bank channel distribution. "I think we'll look progressively at our client base and our territories and add people in the right place when the time is right."
