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ANNUITIES in the 21st CENTURY

ANNUITIES in the 21st CENTURY. Changing Annuities Distribution Business Model. Traditional “Captive” Distribution Model. Sales are by “captive” agents selling insurer’s proprietary products

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ANNUITIES in the 21st CENTURY

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  1. ANNUITIES in the 21st CENTURY Changing Annuities Distribution Business Model

  2. Traditional “Captive” Distribution Model • Sales are by “captive” agents selling insurer’s proprietary products • Generally used by insurers who don’t sell products through 3rd party insurance agents or registered representatives

  3. Traditional/Captive Sales Force Business Model • Insurer • Contracts with, supervises and compensates agent • Screens applications for good order requirements • Performs suitability review Insurer affiliated agency or broker/dealer • Licensed insurance agent/ • Registered representative • Solicits Business • Submits Applications to Insurer

  4. Captive Sales Force Variations • Captive agents may sometimes sell other companies’ products • may have non-exclusivity agreement with insurer • may be permitted to sell other insurers’ products that primary insurer doesn’t offer • Some insurers sell through both captive and 3rd party agents

  5. “New” Independent Distribution Model • Insurers may offer annuities through multiple licensed agent selling firms • Selling firms may offer multiple insurers’ annuities

  6. New Business Model Hartford Met Life AXA Prudential Lincoln National Nationwide Regional B/D Wirehouse B/D Insurance Affiliated B/D Independent B/D Bank B/D Edward Jones A.G. Edwards Raymond James & Assoc Waddell & Reed Legg MasonJeffries Stiffel Nicholas Merrill Lynch Wachovia Securities Morgan Stanley Salomon Smith Barney UBS Pruco Securities NY LIFE Securities Allstate Financial AXA Advisors Linsco Private Ledger Ameriprise Fin. Advs Securities America NFP First Global Capital Commonwealth Financial Cadaret Grant Banks PNC Bank Wachovia Bank Wells Fargo Bank of America Third Party Marketers IFMG Distributors Pacific Life ING Ameriprise Transamerica Aegon John Hancock Genworth

  7. Examples of Independent Firms: Wirehouse Broker/Dealers • Merrill Lynch • Wachovia Securities • Morgan Stanley • Salomon Smith Barney • UBS

  8. Examples of Independent Firms: Regional Broker/Dealers • Edward Jones • A.G. Edwards • Raymond James & Assoc. • Waddell & Reed • Legg Mason • Jeffries • Stiffel Nicholas

  9. Examples of Independent Firms: Independent Broker/Dealers • Linsco Private Ledger • AMEX Financial Advisors • Securities America • NFP • First Global Capital • Commonwealth Financial • Cadaret Gran

  10. Examples of Independent Firms: Banks • PNC Bank • Wells Fargo • Bank of America • Chase bank • U.S. Bank

  11. Examples of Independent Firms: Independent Marketing Organizations • IFMG Distributors • Safe Harbor • Creative Marketing • Brokers International, Ltd.

  12. Broker/Dealer Business Model • Insurer • Contracts with and compensates Broker Dealer • Delegates & Monitors Suitability Supervision • Broker Dealer • Either licensed ins. agency or has established affiliated ins agency • Contracts with, compensates and supervises agent • Reviews applications for good order requirements • Performs suitability review – in some cases, only for variable annuities • Submits applications to Insurer • Licensed Insurance Agent/Registered Representative • Solicits Business • Submits applications to Broker Dealer

  13. Bank (Non-Broker Dealer) Business Model • Insurer • Contracts with & compensates bank insurance agency • Delegates & Monitors Suitability and Supervision • Bank Insurance Agency • Contracts with, compensates & supervises agents • Reviews applications for good order requirements • Performs suitability review • Submits applications to Insurer • Licensed Insurance Agent/Registered Representative • Solicits Business • Submits applications to Agency

  14. IMO Business Model #1 • Insurer • Contracts with and compensates both IMO and Agent • Screens applications for good order requirements • Performs suitability reviews and supervises agent • Independent Marketing • Organization • Provides access to group of agents • Performs Product Marketing • Communicates with agents • Licensed insurance agent • Solicits Business • Submits Applications to Insurer

  15. IMO Business Model #2 • Insurer • Contracts with & compensates both IMO & Agent • Screens applications for good order requirements • Performs suitability reviews & supervises agent • Independent Marketing • Organization • Provides access to group of agents • Performs Product Marketing • Communicates with agents • Licensed insurance agent • Solicits Business • Submits Applications to Insurer • Managing General Agent • Contracts with agents • Compensates agents • Provides agents with sales support

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