Indexed annuities claimed 53 percent of third quarter’s fixed annuity sales, according to the Beacon Research Fixed Annuity Premium Study; income annuities had a 14 percent share. Both were record highs.
At $2.4 billion, income annuities also had their strongest quarter ever, with deferred income annuities (DIAs) generating 77 percent of the $87 million quarter-to-quarter increase. Indexed annuities had their third-best quarter. Sales of $8.7 billion were up 0.5 percent year over year, though down 1 percent sequentially. On a year-to-date basis, both product types had record-high results: indexed with $25.7 billion (up 4.5 percent), and income with $6.8 billion (up 9 percent).
“Indexed and income annuity market shares grew because their value propositions were attractive relative to the conservative alternatives in third quarter’s low interest rate, uncertain economy,” said Jeremy Alexander, CEO of Beacon Research. “They also became more dominant because fixed rate annuity sales declined so significantly. Many carriers focused on the profitability of their fixed rate annuity product lines at the expense of sales.”
Total fixed annuity results were $16.6 billion in third quarter 2012, down 13 percent from a year ago and 3 percent from the prior quarter. Year-to-date sales fell 13 percent to $50.6 billion. Quarterly and YTD results were lower due to large decreases in fixed rate annuity sales.
In terms of carrier results, Allianz continued as the quarter’s leading company. Security Benefit Life became a top five company for the first time, placing fourth. Aviva USA and New York Life switched places to come in second and third, respectively. American Equity moved down a notch to take fifth place.
Nationwide took the lead in sales of fixed rate non-MVA annuities and was also the new leader in the bank and wirehouse channels. Pacific Life became the top fixed annuity issuer among independent broker-dealers.
‘We’re encouraged to hear that a number of carriers are developing new indexed and income annuity products, and also investing in technology to support their fixed annuity business,” Alexander concluded. “But we don’t expect much sales growth until the interest rate environment improves.”
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