Fixed Annuities Enjoy 'Record Year' in 2010: Beacon

Indexed and income annuities claim largest market share in eight years

Following IRI's announcement Monday that variable annuities had a record year in 2010, Beacon Research reported Tuesday in its quarterly Fixed Annuity Premium Study that fixed indexed and income annuities also broke sales records in 2010.

Indexed annuity sales rose 6% for the year to over $31 billion, and claimed 48% of sales, its largest share in the eight years Beacon has conducted the survey. Likewise, income annuities claimed their largest share of sales in the last eight years with 11%. Sales grew 2% to $8 billion.

"Both product types benefitted from growing interest in guaranteed lifetime retirement income and protection from downside risk," Jeremy Alexander, CEO of Beacon Research, said in a statement.

For the fourth quarter, indexed annuity sales reached $8 billion, Beacon estimates, a 16% rise over sales in the fourth quarter of 2009. Year-to-year income annuity sales increased in the fourth quarter as well, though not as much; sales grew 4% to $1.9 billion. Quarter-to-quarter sales for indexed and income annuities fell 7% and 11%, respectively.

The report noted that theinterest rate environment in the fourth quarter hindered fixed annuity sales. The fixed annuity rate advantage diminished in spite of increased rates, according to Beacon. Furthermore, rising rate expectations were a disincentive to buy and fixed annuity buyers chose shorter rate terms to avoid locking in the quarter’s rates for longer periods.

"Consumer demand for conservative investments with guarantees continues to be very strong," commented Alexander. "We expect fixed annuity sales growth to resume when the rate environment becomes more favorable."

Allianz continues to lead in annuity sales, bringing in over $2 billion in fixed annuity sales, according to Beacon. American Equity earned $1.5 billion, while New York Life and Aviva nearly tied with $1.34 billion and $1.33 billion, respectively. Rounding out the top five is Western National Life, which brought in $1.09 billion in fixed annuity sales.

Among independent advisors, Allianz's MasterDex X indexed annuity was the most popular; in fact, MasterDex X was the most popular annuity overall. Among independent broker-dealers, MassMutual's RetireEase income annuity was the most popular.

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