What do annuity sales and base runners have in common? Both continue to slide.
While avoiding the tag when sliding into second is lauded in baseball circles, insurers aren't as pleased to see annuity sales on the decline for the fourth consecutive quarter.
“It’s important to remember that when variable annuity sales plummeted a year ago, fixed annuity sales experienced record growth, propelling overall individual annuity sales into positive territory,” said Joe Montminy, AVP for LIMRA's annuity research. “Despite steady variable annuity sales over the last year, shrinking interest rate spreads have undermined fixed annuity sales—causing total annuity sales to hit an eight-year low this quarter.”
The outlook was infinitesimally rosier for variable annuity (VA) sales, which LIMRA reported improved 5% in Q1 compared to Q1 2009, to total $32.4 billion. But this boon is tempered somewhat by the fact that VA sales in Q1 2009 were at their lowest levels since Q3 2004. When Q1 2010 VA sales are compared with Q4 2009 results, VA sales were actually down 2%.
The lingering shred of optimism from looking at the VA numbers disintegrates when looking at fixed annuity (FA) sales. LIMRA found FA sales continued their free fall, and were down 48% compared to Q1 2009, when FA sales hit a record high. This was the third consecutive quarter of declines for FA sales when compared to sales from the prior year, and a 10% drop from the Q4 of 2009, LIMRA said. FA sales totaled $19.0 billion in the Q1 2010.
Indexed annuities Q1 sales fell 3% compared to Q1 2009, mirroring Q4 2009 sales (totaling $7.0 billion), LIMRA found. Book value sales also declined for the third consecutive quarter, when compared to the year before. Book value sales plummeted 60% from Q1 2009, and 20% compared to Q4 2009. Additionally, Q1 MVA sales dropped 81% from Q1 2009, and 13% from Q4 2009.
