An extensive distribution network is an important factor for driving the sales of life insurance companies like Prudential Financial (PRU), MetLife (MET), Lincoln National Corp (LNC), and Aflac (AFL). Insurance sales may occur through various channels, such as the company’s agents, independent agents, and financial advisers, as well as institutional channels like banks or direct sales channels such as online resources. We outlined this in our insurance industry overview An investor’s guide to the insurance business.
Prudential has a customer base of more than 25,000 corporate clients and over 30 million individual customers. The institutional client base consists of over half of the Fortune 500 list. The retail customer base consists more than 9 million retirees and those close to retirement. Prudential reaches this customer base through a network of more than 125,000 financial professionals.
Individual life and annuity sales
The US retail life insurance market is seeing a change in the distribution channels, with higher sales through independent financial advisers and banks. Prudential has been a part of this trend, as shown in the chart above.
Distribution mixes in both the individual life products and annuities have undergone considerable change over the last ten years. Earlier sales through agents constituted over 70% of sales in both product types. The share of agents has dropped significantly in 2013 for both types, compared to the proportion in 2002.
While agency channels drove ~20% of annuities sales and ~13% of individual life insurance sales in 2013, other mediums have gained importance. For example, sales through brokerages, banks, and wirehouses comprise ~90% of individual life sales. Independent financial planners contribute over 40% of annuities sales, as shown in the chart above.
In the next few articles, we’ll look at Prudential’s US business segments.