VA assets surged in 4Q – but sales dwindled

Variable annuity assets climbed to $1.35 trillion in the fourth quarter — thanks in large part to the recovery in the stock market.

The $1.35 trillion total, according to data from the Insured Retirement Institute, represented a 20% increase from the fourth quarter of 2008.

Elsewhere, the news about the VA business was mixed. According to the IRI, variable annuity sales during the fourth quarter came in at $31.9 billion, down from $33.3 billion in the fourth quarter of 2008.

When accounting for new sales only — and excluding surrenders and exchanges — net sales of variable annuities topped $2.9 billion in the final quarter of 2009, down from $4.15 billion in sales for the year-earlier quarter. Exchange activity slowed as clients became less willing to rack up charges to jump into new products.

New variable annuity prospectus filings with the Securities and Exchange Commission also picked up during 2009, however, with more than 450 filings at the end of the year.

But sales for the full year were down, falling to $125.1 billion in 2009 from $154.8 billion in 2008. The IRI was nonetheless upbeat on how 2010 will shake out — despite the current trend towards “derisking” annuities.

“While 2009 will be noted as a year of change for insured retirement strategies, this year, we will see these products further roll out in the market,” Cathy Weatherford, president and chief executive of the IRI, said. “As we return to simplicity and further align our strategies to the needs of consumers, the industry is optimistic that these new products will gain further traction.”

Variable annuity assets were placed primarily in equities, with 48.5% of the total assets going into that category. About 22% of the assets went into fixed-rate accounts, while 11.5% went toward bonds.