Annuity Writers Show Significant Growth

For the third straight day, the annuities sector reported positive second quarter numbers despite the falling interest rates. Beacon Research’s “Fixed Annuity Premium Study” announced today an eight percent quarter-to-quarter improvement, and a three percent year-to-year increase for the first half of 2011.

On Tuesday, LIMRA reported overall annuity industry sales from the first half of 2011, ending June 30, increased 19 percent compared to the same period in 2010. Yesterday, the Insured Retirement Institute posted similarly favorable numbers for the second quarter, reporting a 10-percent year-to-year sales increase and a four-percent quarter-to-quarter sales increase.

“We anticipated the sequential growth in both indexed and income annuities,” said Jeremy Alexander, CEO of Beacon Research. “Indexed annuity cap rates trended lower, but still looked good compared to the quarter’s declining fixed rates on annuities and CDs. We also expected falling interest rates to dampen sales of both fixed rate annuity types. But yield-seeking purchasers apparently appreciated the somewhat higher rates offered by MVAs.”

Western National Life recorded $2 billion in total fixed annuity sales, while Allianz checked in second with $1.87 billion and New York Life took third with $1.67 billion. American Equity Investment Life Insurance Co. and Aviva USA also reported fixed annuity sales figures of more than $1 billion.

According to Beacon’s study, of the four product types, only fixed-rate non-market value adjustment annuities (MVAs) faltered, falling five percent to $8.2 billion. Meanwhile, income annuities grew 30 percent to $2.3 billion, indexed annuities improved 18 percent to $8.4 billion and fixed-rate MVAs increased 4 percent to $1.5 billion.

For reprint and licensing requests for this article, click here.
Core systems Policy adminstration Digital distribution
MORE FROM DIGITAL INSURANCE