Variable annuities finally outselling fixed annuities in banks

Variable annuities in the third quarter outsold their fixed counterparts in the bank channel for the first time in nearly three years.
Sales of variable annuities in the bank channel held steady in September, totaling $1.4 billion. While that’s the same sales volume as in August, it reflected a 28% improvement from the year-earlier period, when bank variable annuity sales stalled at $1.1 billion for most of 2009, according to Kehrer-LIMRA.
In contrast, fixed-annuity sales, which held flat at $1.5 billion per month between June and August, took a dive during September, falling to $1.2 billion in sales that month, according to the Kehrer-Jackson Monthly Bank Annuity Sales Survey.
Unattractive yields on fixed annuities weren’t helping the products sell. The average yield on a five-year guaranteed fixed annuity was 10 basis points below a five-year certificate of deposit, according to the Kehrer-LIMRA Bank Fixed Annuity RateWatch.
Overall, fixed-annuity sales took a dive during the third quarter, according to data from Beacon Research Publications Inc. Sales from all channels tumbled to an estimated $19.5 billion, down 12% from the year-earlier period.
Meanwhile, sales of fixed indexed annuities in all channels climbed to $8.6 billion, up 17% from the third quarter of 2009. Fixed-income annuities also experienced a 17% lift in sales versus the comparable period in 2009, reaching $2.3 billion.
Among independent broker-dealers, Massachusetts Mutual Life Insurance Co.’s RetireEase income annuity was the top-selling fixed annuity. Meanwhile, Pacific Life Insurance Co.’s Pacific Frontiers II market value annuity was the biggest seller among wirehouses. Allianz’s MasterDex X, an indexed annuity, was most popular among independent insurance agents.