Athene Holding Ltd. became the second-largest underwriter of annuities in the U.S. during the third quarter of 2021 despite a 2.6% dip in individual annuity premiums.
In aggregate, the U.S. life industry recorded total considerations of $105.47 billion in the third quarter, and only two periods — the fourth quarters of 2001 and 2012 — produced higher totals, according to S&P Global Market Intelligence data, which dates back to the start of 2001.
Individual annuity considerations increased 13% to $59.19 billion from $52.39 billion in the third quarter of 2020, while group annuity considerations increased 24.6% year over year to $46.28 billion from $37.15 billion.
Athene's total annuity considerations amounted to $9.05 billion in the quarter, with $6.62 billion coming from the group line and $2.43 billion in the individual line, up 262% from the prior-year period. According to its Form 10-Q filing, an increase in premiums was driven by higher pension group annuity premiums, formerly referred to as pension risk transfer.
Athene President William Wheeler said on the company's third-quarter 2021 earnings call that the inflows marked the best quarter yet for the pension group's annuities channel. Wheeler said the inflows were driven by three transactions: one for $700 million with a large building materials producer; one at $1 billion with an auto parts manufacturer; and a $4.9 billion deal with Lockheed Martin Corp.
Under this deal, Athene will provide annuity benefits to approximately 18,000 pension plan participants. This is the second transaction Athene had completed with Lockheed and its largest single transaction to date.
Prudential Financial Inc. also had strong sales within its retirement business during the quarter. Speaking during Prudential's third-quarter 2021 earnings call, Vice Chairman Robert Falzon attributed this to a $5.2 billion funded pension risk transfer transaction. Charles Lowrey, Prudential's chairman, CEO and president, noted this as the fourth largest transaction in the history of the pension risk transfer market. Under the agreement, the company will assume pension benefits and annuity administration from HP Inc. for around 41,000 retirees and beneficiaries.
Prudential recorded a triple-digit percentage increase year over year in total annuity considerations taking the top spot as the largest annuity insurer holding 9.8% of the market during the third quarter of 2021.
Between the end of the second and third quarters, both Prudential and Athene more than doubled their market share.
Massachusetts Mutual Life Insurance Co. and Jackson Financial Inc. fell two places year over year to the third and fourth spots, respectively.
Four of the top 15 U.S. annuity underwriters recorded lower total annuity considerations during the period. Transamerica Corp. and TIAA saw double-digit year-over-year percentage decreases.
Among the top insurers, TIAA reported the sharpest decline in total annuity considerations at 20.8% to $3.19 billion from $4.03 billion in the third quarter of 2020.
Individual annuities refer to fixed and variable annuities and are reported as ordinary within NAIC statutory statements. Group annuities include investment options typically available in tax-advantaged savings accounts and guaranteed investment contracts.
S&P Global Market Intelligence uses statutory total annuity premiums and considerations to determine market share. Total annuity consideration is a preferred indicator of market share as it not only reflects new business but also the persistence of a company's existing business in the form of renewal annuity considerations. Additionally, many policyholder acquisition costs are not recovered within one year. As such, total annuity premiums and considerations can also be a better indicator of profitability for life insurers, whereas new sales do not necessarily equate with profitability