ANNUITIES in the 21st CENTURY

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ANNUITIES in the 21st CENTURY
Changing Annuities Distribution Business Model
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Traditional Captive Distribution Model

• Sales are by captive agents selling insurers
  proprietary products
• Generally used by insurers who dont sell
  products through 3rd party insurance agents or
  registered representatives

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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

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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 doesnt offer
• Some insurers sell through both captive and 3rd
  party agents

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New Independent Distribution Model

• Insurers may offer annuities through multiple
  licensed agent selling firms
• Selling firms may offer multiple insurers
  annuities

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New Business Model
Hartford
AXA
Lincoln National
Prudential
Nationwide
Met Life
Wirehouse B/D
Bank B/D
Independent B/D
Regional B/D
Insurance Affiliated 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
Ameriprise
John Hancock
Transamerica Aegon
Genworth
ING
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Examples of Independent Firms Wirehouse
Broker/Dealers

• Merrill Lynch
• Wachovia Securities
• Morgan Stanley
• Salomon Smith Barney
• UBS

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Examples of Independent Firms Regional
Broker/Dealers

• Edward Jones
• A.G. Edwards
• Raymond James Assoc.
• Waddell Reed
• Legg Mason
• Jeffries
• Stiffel Nicholas

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Examples of Independent Firms Independent
Broker/Dealers

• Linsco Private Ledger
• AMEX Financial Advisors
• Securities America
• NFP
• First Global Capital
• Commonwealth Financial
• Cadaret Gran

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Examples of Independent Firms Banks

• PNC Bank
• Wells Fargo
• Bank of America
• Chase bank
• U.S. Bank

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Examples of Independent Firms Independent
Marketing Organizations

• IFMG Distributors
• Safe Harbor
• Creative Marketing
• Brokers International, Ltd.

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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

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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

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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

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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