A Wall Street Transcript Interview with Randy Binner, a Managing Director Covering the Life and Property/Casualty Insurance Sectors at FBR Capital Markets & Co.: A Strong Growth Profile for Indexed Annuities

Wall Street Transcript

67 WALL STREET, New York - June 11, 2014 - The Wall Street Transcript has just published its Insurance Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Low Profitability and Low Interest Rates - Commercial Line Brokers and Underwriters - Consolidation Trends - Emerging Market Expansion - Analysis Of Personal, Commercial & Reinsurance Subsectors

Companies include: Lincoln National Corp. (LNC), American International Group, (AIG), MetLife, Inc. (MET), Prudential Financial, Inc. (PRU), XL Capital Ltd. (XL) and many others.

In the following excerpt from the Insurance Report, an expert analyst discusses the outlook for the sector for investors:

TWST: What's your outlook for variable annuity sales during the second half of 2014, and which companies will benefit?

Mr. Binner: We think that variable annuity sales for the back half of 2014 and through 2014 overall will rise. We do a channel check report every year where we survey distributors of the product. After seeing declines in VA sales in 2012 and 2013, we think there is going to be increased demand this year from distributors to sell the product despite the fact that the product pricing and the fees charged to consumers are higher, so safer for the insurance companies. We think that the demand for the products is there, and we think that the distributors will sell it again this year. Lincoln (LNC) and AIG (AIG) we see as the big market share gainers this year in VA.

TWST: By contrast, MetLife was reducing its VA market share. What's your take on that shift in their strategy?

Mr. Binner: For both MetLife (MET) and Prudential (PRU), they ramped VA sales up significantly right after the financial crisis, and given mostly the transition to the lower interest rate environment, among other things, they made a decision to shift strategic direction. The strategic direction they are going in - particularly MET is going in a direction of being more international and less interest rate exposed, and so VA was not consistent with that. A combination of those factors led MET to pull back on VA sales.

MET VA sales will stabilize at current levels, but that should still provide the ability for AIG and Lincoln to gain share, because the overall demand for VAs from Baby Boomers will continue to increase.

TWST: Fixed and indexed annuities were both showing strong growth in 2013. How have they been trending this year, and what is your outlook for the second half?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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