With VA bennies being jettisoned, customers hop on indexed annuities

With VA bennies being jettisoned, customers hop on indexed annuities
Search for guaranteed income boosts sales; rising stock market fails to lift VAs
NOV 09, 2012
Annuity sales took a dive during the first quarter, but sales of fixed indexed annuities jumped — thanks in large part to guaranteed lifetime withdrawal benefit riders. During the first three months of 2012, annuity sales fell by 8% compared to the year-earlier period, landing at $54.8 billion, according to data from LIMRA International. Variable and fixed annuities were hurt by the decline. Strengthening equity markets couldn't buoy variable annuity sales, which fell to $36.8 billion, down 7% from the comparable quarter in 2011. Of course, insurers' decision to change their VAs to make them more conservative —read: reduced living benefits — helped squash sales. “As we noted last quarter, we are still seeing companies carefully manage the risks associated with guaranteed living benefit riders,” said Joseph Montminy, LIMRA's assistant vice president for annuity research. “VA sales dropped despite the 13% equity market gains in the first quarter Sales of fixed annuities, too, slipped amid a low-interest-rate environment. Sales fell 10% compared with the year-earlier period. Indexed annuities, however, rose by 14% in the first quarter, reaching $8.1 billion. Guaranteed lifetime withdrawal benefits helped move the product among customers: Two out of three people who bought fixed indexed annuities decided to buy a GLWB rider, which lets customers get lifetime income without annuitizing their contracts. Allianz Life Insurance Co. of North America held onto its first place standing among sellers of fixed indexed annuities with its MasterDex X annuity. Aviva Life and Annuity Co. came in second, according to data from AnuitySpecs.com. American Equity Investment Life Holding Co. ranked third.

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