With VA bennies being jettisoned, customers hop on indexed annuities

Search for guaranteed income boosts sales; rising stock market fails to lift VA

May 23, 2012 @ 12:14 pm

By Darla Mercado

annuities
+ Zoom

Annuity sales took a dive during the first quarter, but sales of fixed indexed annuities jumped — thanks in large part to guaranteed lifetime withdrawal benefit riders.

During the first three months of 2012, annuity sales fell by 8% compared to the year-earlier period, landing at $54.8 billion, according to data from LIMRA International. Variable and fixed annuities were hurt by the decline. Strengthening equity markets couldn't buoy variable annuity sales, which fell to $36.8 billion, down 7% from the comparable quarter in 2011.

Of course, insurers' decision to change their VAs to make them more conservative —read: reduced living benefits — helped squash sales.

“As we noted last quarter, we are still seeing companies carefully manage the risks associated with guaranteed living benefit riders,” said Joseph Montminy, LIMRA's assistant vice president for annuity research. “VA sales dropped despite the 13% equity market gains in the first quarter

Sales of fixed annuities, too, slipped amid a low-interest-rate environment. Sales fell 10% compared with the year-earlier period.

Indexed annuities, however, rose by 14% in the first quarter, reaching $8.1 billion.

Guaranteed lifetime withdrawal benefits helped move the product among customers: Two out of three people who bought fixed indexed annuities decided to buy a GLWB rider, which lets customers get lifetime income without annuitizing their contracts.

Allianz Life Insurance Co. of North America held onto its first place standing among sellers of fixed indexed annuities with its MasterDex X annuity. Aviva Life and Annuity Co. came in second, according to data from AnuitySpecs.com. American Equity Investment Life Holding Co. ranked third.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

DOL fiduciary rule opponents and supporters sound off on Jan. 1 deadline

Senior reporter Mark Schoeff Jr. and managing editor Christina Nelson discuss the latest batch of comment letters on the regulation, this round focused on timing of the full implementation date.

Latest news & opinion

Cetera broker-dealers to pay back $3.3 million to clients overcharged for mutual funds

Over an eight-year period, the B-Ds failed to properly supervise sales charge waivers to clients in retirement plans and charitable organizations.

Fiduciary advocates press CFP Board for specifics on standards changes

Meanwhile, few brokerages and their trade associations, which blasted the DOL's fiduciary rule in comment letters, are responding to the CFP Board's proposal.

Big gains attract new money to emerging markets, but should investors stay?

An estimated $6.7 billion has flowed into emerging-market stock funds and ETFs so far this year, according to Morningstar.

Attorney blasts Finra after regulator loses insider trading case

Lawyer says it was 'slimy' of Finra to publicize the case while it was still being litigated.

Will Jeffrey Gundlach's Trump-like approach on Twitter work in financial services?

The DoubleLine CEO's attacks on Wall Street Journal reporters is igniting a discussion on what's fair game on social media.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print