Protective protects itself

Up-and-coming variable annuity player Protective Life Insurance Co. is taking steps to stem the flow of contract premiums.

In a filing last Monday with the Securities and Exchange Commission, Protective said that it no longer will accept any variable annuity payments if the money is coming from either a 1035 exchange or a retirement plan rollover.

Protective will continue to take payments that aren’t funded through 1035s or rollovers, the company noted in the filing.

COMPANY GETS ATTENTION

The company’s profile has been raised considerably among financial advisers since the biggest VA sellers, having decided they’d had their fill of the business and its exposure to long-term liabilities and low interest rates, have pulled back.

Protective’s block of VA business has fared well due to recent rising markets, which is a boon for fee income, John D. Johns, president and chief executive of the insurer, noted in a first-quarter earnings call.

The carrier had $797.1 million in new VA sales during the fourth quarter of 2012, compared with $853.9 million in the year-earlier period. Over the past five years, Protective has seen significant momentum in its VA business, ending 2012 with $2.73 billion in VA sales, up from $452 million in 2008.

Protective has climbed the ranks among VA sellers, reaching No. 13 in the fourth quarter of last year, up from No. 16 in the fourth quarter of 2011, according to Morningstar Inc.

In general, the majority of overall variable annuity sales come from 1035 exchanges, as opposed to new money.

Protective has been taking steps to slow sales; the company “has been taking different price actions in derisking,” Mr. Johns noted on the first-quarter call.

“We have been planning for variable annuity sales to moderate as they did on a sequential basis in the quarter,” he said on the call. “We view that as very much in line with our plan.”

Protective Life spokeswoman Eva Robertson was not available to comment.