A list of words that are forbidden for use in life and annuity advertisements.
By Cyril Tuohy
First-quarter fixed and variable annuity (VA) sales though banks reached $9.4 billion, an increase of 31 percent compared to the year-ago period, with higher fixed annuities sales the major reason for the increase, the Bank Insurance & Securities Research Associates (BISRA) said.
First-quarter sales of fixed and VAs declined slightly from $9.5 billion in the fourth quarter 2013, BISRA added.
Janet Cappelletti, head of research for BISRA, said sales of fixed annuities hit $5.3 billion. The previous first-quarter high was $5.2 billion in 2011.
“We generally see a lift in fixed sales in the second quarter over the first, so this bodes well for the second quarter,” she said in a news release.
VA sales in the first quarter declined to $4.1 billion, from $4.5 billion in the year-ago period, BISRA also said.
Dan Beatrice, associate research director at BISRA said that higher bank-sold fixed annuity sales were due to a more diversified product mix, with indexed annuities a particular favorite of the bank channel.
Between a quarter to one-third of bank-sold fixed annuities come from indexed annuities, and indexed annuity sales reached $1.74 billion in the first quarter, BISRA reported.
“As the economy has slowly emerged from the Great Recession, growth in bank-sold annuities has come from a more diversified product mix, led by growth in indexed annuities,” Beatrice said.
Forethought Annuity, a company particularly active in selling annuities through banks, saw sales jump by more than $400 million, though that also had to do with its merger with Commonwealth Annuity, BISRA said.
“With fixed, variable and long-term care annuities, and soon fixed index annuities as well, they can help address the needs of almost any customer with the same level of confidence and familiarity,” Paula Nelson, head of annuity distributors at Forethought Distributors, said in a statement.
Some companies like to sell annuities through banks since depositors with certificates of deposit offer a ready market for safe, income-generating investments like annuities.
Every time depositors are ready to roll over their low-yielding CDs, banks have an opportunity to offer them an annuity.
With interest rates trending higher in the first quarter, annuities offered a more attractive investment compared to CDs. In addition, with baby boomers entering retirement, banks have more depositors to whom an annuity may be attractive.
The higher the volume of annuities sold through banks, the more fee income to the bank.
Income earned from the sale of annuities at bank holding companies reached a record $3.43 billion last year, up 9 percent from 2012, according to a separate report in April by the bank consulting firm Michael White Associates.
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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