June 10, 2013

Deferred Income Annuity Sales Reach Record

Over all, annuity industry continues to struggle in low-interest rate environment

Allianz was the top fixed annuity seller in Q1. (Photo: AP) Allianz was the top fixed annuity seller in Q1. (Photo: AP)

It’s a silver lining to an otherwise dismal quarter.

Sales of deferred income annuities reached a record high in first quarter 2013, according to the Beacon Research Fixed Annuity Premium Study. This is the fifth consecutive quarter in which they increased, climbing 150% higher than a year ago. The success of DIAs helped overall income annuity sales grow 1.4% year over year.

"Deferred income annuities were a bright spot in a difficult quarter," said Jeremy Alexander, CEO of Beacon Research, said in a statement. "Ongoing product development and increasing sales underscore the importance of generating guaranteed retirement income for consumers and their advisors."

But the industry continued to be impacted by the ongoing low interest rate environment, according to Alexander. Total fixed annuity results were $15 billion in the first quarter, down 11.7% from a year ago and 7.7% sequentially.

However, fixed rate MVA sales dipped only slightly from the prior quarter, suggesting that consumers are willing to accept some potential interest rate risk in exchange for higher credited rates. Indexed annuity sales decreased 7.9% quarter on quarter to $7.8 billion, and fixed rate non-market-value-adjusted (MVA) annuities fell 8.1% sequentially to $4 billion. Income annuities dropped 8.2%.

Allianz was once again the top fixed annuity company in the quarter, followed by Security Benefit Life, New York Life, American Equity and Jackson National.

Western National Life moved from fifth place to take the lead in bank channel and fixed rate non-MVA sales. The other top companies in sales by product type and distribution channel were unchanged from the prior quarter.

Security Benefit Life had two of the quarter's five top-selling fixed annuities for the first time. Its Total Value Annuity was the quarter's bestseller, up from fourth place last quarter, and the Secure Income Annuity joined the top five in third place.

New York Life's Lifetime Income Annuity, the quarterly bestseller throughout 2012, finished second. American Equity's Bonus Gold and Allianz's Endurance Plus indexed annuities both dropped two notches, but remained in the top five at number four and five, respectively.

"We expect that fixed annuity sales in the coming months will follow the pattern set early in the year," Alexander concluded. "Sales may increase slightly coming off from a record year for indexed and income annuities, but low interest rates will continue to hamper significant growth in the near future.

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Check out Top 20 Companies for Annuity Sales: Q1 on AdvisorOne.

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