Why guaranteed lifetime withdrawal benefit election rates continue to rise.
By Cyril Tuohy
Total sales of fixed annuities in 2013 reached $78.1 billion, up 16.6 percent from 2012, as sales through independent broker-dealers and financial advisors hit records, according to new numbers released by Beacon Research.
Fourth quarter sales reached $23.5 billion, up 4.7 percent from the third quarter, and up 45.2 percent from the year-ago period, Beacon said.
“Fourth quarter 2013 marked a number of milestones with respect to fixed annuity sales, contributing to a banner year for the industry,” said Jeremy Alexander, chief executive officer of Beacon Research.
For the first time since 2009, total sales of fixed annuities increased for three consecutive quarters and sales through independent producers reached nearly $10 billion, he added.
The research is published in the latest edition of the consulting firm’s “Fixed Annuity Premium Study.”
Four categories of fixed annuities tracked by Beacon Research reported higher 2013 sales compared to 2012. Those categories are: fixed, indexed, income, fixed rate non-market value adjusted and fixed rate market value adjusted annuities.
Fixed rate market value adjusted annuities are written for a limited interest guarantee period. If a contract holder cashes out before the end of the period, the carrier will “adjust” the surrender value depending on interest rates at the time of purchase.
Analysts have pointed to rising interest rates as a reason for higher sales of fixed annuities. Alexander said that Beacon expects total fixed annuity sales growth “to continue modestly during the first half of 2014.”
“Treasury rates in the early part of the year have held steady, enabling carriers to maintain their credited rates and build off the momentum achieved in 2013,” Alexander said.
Beacon reported that in 2013, indexed annuities reached $38.7 billion, an increase of 13.2 percent from 2012. Income annuities reached $11 billion, an increase of 19.9 percent from 2012.
Fixed rate non-market value adjusted annuities reached $21.6 billion, up 14.8 percent compared to 2012, the company said, and fixed rate market value adjusted annuities reached $6.7 billion, up 41.4 percent compared to 2012.
In the fourth quarter, the top seller of fixed annuities was Allianz Life with $2.3 billion in sales, followed by Security Benefit with $1.7 billion, New York Life with $1.38 billion, Great American with $1.35 billion and American Equity with $1 billion.
Full year 2013 sales leaders of fixed annuities were New York Life with $6.2 billion, Allianz Life and Security Benefit, each with $6 billion, Beacon said. The three companies combined for a 23.5 percent market share of 2013 industry sales.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at firstname.lastname@example.org.
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