Fixed-annuity sales down in 4Q and full-year 2009

Fixed-annuity sales slid in the fourth quarter and dropped off slightly for the full year of 2009.

All told, fixed-annuity sales last year topped $105 billion, according to data from Beacon Research Publications Inc. and the Insured Retirement Institute. That tally is just 2% below the record high, reported in 2008.

For the final quarter of 2009, fixed-annuity sales totaled $20.4 billion, down 8% from the third quarter.

Indexed-annuity products fared well, with $30.2 billion in sales. That is up $3.5 billion year-over-year.

Fourth-quarter sales of indexed annuities were up 3.2% over the third quarter for a total of $7.6 billion.

There were declines in other categories of fixed annuities.

Book-value annuities fell to $8.99 billion in the fourth quarter, down from $17.1 billion a year earlier. Market-value-adjusted annuities fell to $1.86 billion, from $7.45 billion a year earlier.

Meanwhile, income annuities fell to $1.92 billion in the fourth quarter, from $2.36 billion a year earlier.

Annuity sales in the bank channel also experienced declines for the last two months of the year, according to data from the Kehrer-LIMRA Monthly Bank Annuity Sales Survey.

Bank sales of fixed and variable annuities fell to $2.7 billion in November, down 23% compared with October and down 37% from a year earlier. The sales picked up slightly in December to $2.8 billion.

Fixed-annuity sales through banks in November fell to $1.7 billion, down 47% from a year earlier. At the end of the year, fixed-annuity sales in banks fell to $1.6 billion.

Variable annuities didn’t pick up the slack. Banks’ sales of variable annuities hit $1 billion in November, slightly below the $1.1 billion level they hit each month from March through September.

Sales climbed by 20% to $1.2 billion in December.

Dismal interest rates slowed fixed-annuity sales, while higher fees and decreased benefits dragged down VA sales, said Scott Stathis, managing director of Kehrer-LIMRA.

Mutual fund sales, which typically aren’t as profitable to banks as annuities, fared well. Bank mutual fund sales hit $4.4 billion in November, up from $2 billion a year earlier, and were $5.1 billion in December.

E-mail Darla Mercado at [email protected].