Total individual-annuity sales tumbled during the second quarter as carriers' new business slowed and fixed-annuity interest rates fell, although sales for all fixed annuities fared better, according to data from LIMRA.
Total individual-annuity sales tumbled during the second quarter as carriers’ new business slowed and fixed-annuity interest rates fell, although sales for all fixed annuities fared better, according to data from LIMRA
Individual-annuity sales in the second quarter fell to $60.5 billion, down 11% from the same time last year, according to data from the Windsor, Conn.-based LIMRA International Inc.
Variable annuity sales also took a dive, falling $31.9 billion at the end of the second quarter, a 24% drop compared with the second quarter of 2008.
And in the first six months of the year, VA sales also took a hit, falling to $62.6 billion, a decline of 26% from the from the first half of last year.
Sales for all fixed annuities, however, fared better, with sales rising to $28.6 billion, an 11% increase from the second quarter of 2008.
Year to date, results were even more dramatic, as fixed annuities sales picked up by 39% and hit $64.2 billion.
The story was slightly different between the first and second quarters of 2009: In that period, variable annuity sales grew by 4% to $31.9 billion, while fixed annuities fell 20% to $28.6 billion.
“Second-quarter fixed sales fell quarter-over-quarter due to a decline in fixed-annuity interest rates and their corresponding spreads, in addition to annuity companies’ pulling back on issuing new business due to capital constraints,” Joe Montminy, research director for LIMRA’s annuity research, said in a statement.
Variable annuity sales tend to follow the stock market — both of which picked up this spring — and demand for guarantees on the products helped drive sales between the first and second quarters, he noted.
Fixed-deferred annuities, along with book value and equity-index annuities, picked up steam in the second quarter.
Sales of fixed-deferred annuities, which grow at a fixed interest rate over a long period of time, grew to $25.3 billion, growing 13% more compared to the same period in 2008.
These products were also the most popular type of fixed annuity.
Both book value and equity index annuity sales grew 17% year-over-year.
Book value annuities, which pay a declared rate of interest for a specific period of time, rose to $13.8 billion in quarterly sales, up from $11.8 billion in the year-ago period.
Sales of equity index annuities, which have an interest crediting rate that’s linked to changes in an equity index, increased to $8.1 billion from $6.9 billion in the second quarter of 2008.
