Variable annuity sales plunged 30% in 4Q

Sales of variable annuities fell in the fourth quarter as premium flows hit $33.3 billion, according to data from NAVA Inc. That’s down 30.3% from the comparable period in 2007. Fourth-quarter net sales of variable annuities, which exclude exchanges, withdrawals and surrenders, were $3.4 billion, down 61.5% from the fourth quarter in 2007, the Reston, Va.-based variable annuity trade association noted. Total sales for the full year were $154.8 billion, down from $182.2 billion in 2007, while net sales in 2008 were $23.1 billion, down 30.8%. Net assets in variable annuities continued to ebb, falling to $1.13 trillion in the fourth quarter, down from $1.49 trillion in the previous year. There were also fewer assets in equity accounts at the end of 2008, with $504 billion, or 45% of assets, in that position. That’s down from 59.9% in 2007. Meanwhile, fixed accounts held 25.9% of assets, up from 17.2% last year, as did bonds, which had 11.3% of assets, up from 8.5% in 2007. The less-than-glowing results prompted a statement from NAVA president and chief executive Cathy Weatherford, who assured members that interest in variable annuities will rebound. “Annuities can fill the gap between retirement income and expenses because they are the only investment product that can provide a guaranteed lifetime income,” she said in a statement.