Changes in the U.S. individual annuity market are reshaping the pools of assets T. Rowe Price manages for life insurers.
Rob Sharps talked about the changes Friday, during a conference call with securities analysts.
T. Rowe sees attractive opportunities to managed more fixed income assets for life insurers, Sharps said. The company has also developed a lifetime income feature for 401(k) plan account users that combined a managed payout arrangement from T. Rowe Price with a qualified longevity annuity contract from Pacific Life.
And a life insurer expects to end a large variable annuity subadvisory relationship with T. Rowe Price by the end of the year.
"VA is a business that several of our clients have deemphasized," Sharps said.
Some insurance company clients still like variable annuity products, but others are focusing more on sales of fixed indexed annuities, registered index-linked annuities and other products, and that makes the asset trends different for traditional variable annuities than for other life and annuity products, Sharps said.
What it means: The shift away from traditional variable annuity sales is affecting outflows and inflows of cash at the big-name asset managers that have sub-advised the contracts subaccounts.
