With 76 million Baby Boomers beginning to approach retirement age, insurance companies continue to scramble to find innovative ways to capture their attention.

Increasingly, insurers have been launching innovative annuity products in an effort to convert a portion of Boomers’ nest eggs into income-for-life cash flows.

In January, Principal Financial Group Inc., the nation’s largest administrator of 401(k) retirement plans, introduced an annuity product designed to piggyback onto other providers’ 401(k) plans that don’t offer an annuity income option. Similar products have been announced recently by Prudential Financial Inc. and MetLife Inc.

“We’ve been providing this annuity solution for 60 years, but what’s new is we’re marketing it to companies not using our 401(k),” said Joe McCarty, Principal’s director of annuity products and services. “A Vanguard or other type of (mutual) fund may be looking for that type of solution; we don’t have to be your 401(k) or retirement plan administrator to provide that product.”

According to a survey of benefits provided by large employers by Hewitt Associates Inc., a human resources and consulting company, the number of companies offering an annuity payout option to their 401(k) recipients dropped from 31 percent in 1999 to 17 percent in 2003. Insurers like Principal believe that trend will reverse itself, however, as Boomers realize the need to convert a portion of their portfolios into income-producing assets.

Because it’s institutionally priced, Principal’s annuity add-on product allows employees to purchase at a discount of 5 to 15 percent compared with the individual market, McCarty said.

Also in January, AmerUs Group Co. introduced a fixed-income annuity with a weighted-index approach that company officials say is unique in the industry. The product, which is marketed to individual retirees rather than groups, gives investors the best weighted performance of three broad stock indexes — the Standard & Poor’s 500, the Dow Jones Industrial Average and the Nasdaq Composite Index — without risking any principal, said Brian Clark, executive vice president and chief product officer for AmerUs.

“What’s unique is that we don’t determine the weights until the end of the (one-year crediting) period,” Clark said. The best-performing index gets a 50 percent weighting, the second-best gets 30 percent and the third-best is weighted at 20 percent.

By investing in call options to hedge each index, AmerUs can provide a possible upside-capped return of up to 7 percent. At worst, the investor will have essentially “sat on the sidelines” and earned no return that year.

“We are a firm believer that over time the weighted equity-index strategy will deliver a higher rate of return,” Clark said.

AmerUs last month was named in a lawsuit filed by the California attorney general alleging inappropriate sales tactics for its annuity products by one of its insurance subsidiaries and marketing organizations that represent it. Clark declined to comment on the suit, but referred to a February statement by the company that said AmerUs “intends to vigorously defend its position in court.”

The company is targeting $2.2 billion in annuity sales in 2005, with at least 85 percent of those sales in fixed indexed products, Clark said. In 2004, AmerUs sold $1.84 billion in annuities.