Report: variable annuity rebound depends on new customers. (Life/Health: Marketplace).Variable annuity Variable Annuity An insurance contract in which, at the end of the accumulation stage, the insurance company guarantees a minimum payment. The remaining income payments can vary depending on the performance of the managed portfolio. providers need to find new customers rather than cannibalize can·ni·bal·ize v. can·ni·bal·ized, can·ni·bal·iz·ing, can·ni·bal·iz·es v.tr. 1. To remove serviceable parts from (damaged airplanes, for example) for use in the repair of other equipment of the same clients of competitors, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. a report by Conning & Co. "The long-term outlook for the industry is bleak if sales are driven by surrenders," said Elvin Turner, vice president and author of the study. "If variable annuity insurers are trading dollars Trading Dollars Slang for a company that is spending just as much money as it is making on a product that it develops. Notes: An example is a gold exploration company that spends $5 million to mine $5 million worth of gold. See also: Capital Intensive, Labor Intensive with each other, they are not growing the market.. .The fact that large numbers of new buyers are not yet in the market is one of the reasons that variable annuity sales hit a wall in 2001." The study, "Variable Annuity Marketplace: Thriving in Unfamiliar Terrain," found that surrenders grew 28% annually from 1997 to 2000, roughly twice the rate of premium-and-deposit growth. In the same period, expenses rose 13% annually. But focus on new customer-acquisition strategies and help from a revitalized economy may result in a comeback for variable annuities Variable annuities Investment contracts whose issuer pays a periodic amount linked to the investment performance of an underlying portfolio. , Turner said. Only about 6% of the U.S. population owns variable annuities, according to the report. New product features like the guaranteed minimum-income benefit may attract new customers, said Turner. He also said insurers that control costs by investing in their businesses will benefit from the economic recovery. |
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