WINDSOR, Conn. May 18, 2012—Total annuity sales declined eight percent in the first quarter compared to the first quarter of 2011, to reach $54.8 billion.
Variable annuity sales, which largely sustained overall sales the past eight quarters, experienced a seven percent drop in the first quarter, totaling $36.8 billion.
“As we noted last quarter, we are still seeing companies carefully manage the risks associated with guaranteed living benefit riders. As a result, VA sales dropped despite the 13 percent equity market gains in the first quarter,” said Joseph Montminy, LIMRA assistant vice president, annuity research. “However, consumer demand for GLB riders continues to be strong; VA GLB election rates remained at 90 percent this quarter, matching the recent high hit last quarter.”
Total fixed annuities dropped 10 percent in the first quarter to $18 billion. LIMRA expects fixed annuities’ struggles to persist as long as the interest rates remain low.
Indexed annuity sales remain the driving force in the fixed market, jumping 14 percent in the first quarter, to reach $8.1 billion. For the third consecutive quarter, indexed annuities outperformed traditional fixed annuities, capturing 45 percent of the fixed annuity market.
Indexed annuity sales are benefiting from the guaranteed lifetime withdrawal benefit (GLWB) riders being offered. In the first quarter of 2012, two out of three indexed annuity buyers elected these riders (when available at time of sale). These riders offer the ability to receive guaranteed lifetime income without requiring the owner to annuitize the contract.
Fixed immediate annuity sales were relatively flat in the first quarter, totaling $1.8 billion.
Book-value sales plummeted 32 percent in the first quarter, to reach $5.8 billion. MVA sales in the first quarter totaled $1.3 billion, falling seven percent.
A list of the top 20 writers of overall total annuities, variable annuities and fixed annuities ranked by first quarter 2012 sales results, as well as the first quarter Annuities Industry Estimates chart, can be found in the updated Data Bank.
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