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

Sponsored financial news

Featured video

Events

Adviser marketing: 3 strategies for success

To help advisers sift through the noise and execute a marketing plan that will deliver the most ROI, three executives from Carson Group sit down with Shannon Rosic to deliver some strategies you can implement today.

Video Spotlight

The Search for Income

Sponsored by PGIM Investments

Recommended Video

Path to growth

Latest news & opinion

How does your advisory firm stack up?

Comparing a firm's pay to the competition can point out vast flaws.

10 signs your client is cheating on you

Sure signs that clients may be on the way out the door.

How adviser salaries stack up to other jobs

Median compensation hovers just under $100,000 on the low end and reaches nearly $300,000 for bosses.

Finra ranking brokers in effort to crack down on industry's bad apples

All 634.403 reps have been ranked based on factors such as prior regulatory disclosures, disciplinary actions and employment history.

How to save retirement planning from tax reform

Losing big deductions, even in lieu of a larger standard deduction, may cause taxes to rise in retirement.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print