Variable annuities sales show signs of life

Variable annuities, whose sales and asset levels slumped during the market downturn, showed signs of a comeback in the second quarter, according to data from the Insured Retirement Institute.
AUG 25, 2009
Variable annuities, whose sales and asset levels slumped during the market downturn, showed signs of a comeback in the second quarter, according to data from the Insured Retirement Institute. Total sales of variable annuities hit $31.8 billion in the second quarter, while total net assets rose to $1.19 trillion, according to the Washington-based annuity trade association. Though that’s down from total sales of $41.9 billion and $1.41 trillion in assets in the second quarter of 2008, there was a significant spike in asset levels from the first quarter of this year. Asset levels in variable annuities surged 11% during the second quarter, up from $1.07 trillion at the end of March — the largest quarter-to-quarter increase in asset levels registered in the last four years, according to the IRI. Variable annuity sales, which tend to follow stock market movement, have been climbing as the economy has begun to improve. “As the economy begins to show signs of stability, consumers continue to be thoughtful about their investments as they come back to the market,” Cathy Weatherford, president and chief executive of the IRI, said in a statement. First-time purchases of variable annuities also picked up from the first to second quarter, climbing to $6.14 billion from $5.09 billion. Consumers' annuity assets remained in a fairly defensive position, with fewer dollars placed in equity accounts and more money in fixed accounts. Variable annuity assets were concentrated in equity accounts, which held 45.4% of the $1.19 trillion in assets. That’s down from 55% in the year-ago period. Meanwhile, more money was placed into fixed accounts, which held 25% of the annuity assets, compared to 19.7% in the second quarter of 2008.

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