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Merrill Analysts Expect Fixed Annuity Sales To Grow Faster Than Variable Annuity Sales

By Staff Writer

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NU Online News Service, July 9, 2:30 p.m. – Despite the recent rebound in the stock market, variable annuity sales probably fell about as fast in the second quarter as they fell in the first quarter, according a recent research note published by Merrill Lynch & Company Inc., New York.

Potential variable annuity buyers may now feel they can take their time when shopping for the product, despite the improvement in the market environment, Merrill Lynch analysts suggest.

Although the analysts say the outlook for variable annuities remains gloomy, they say the outlook for fixed annuities looks bright.

The fixed annuity business has just wrapped up one of the strongest quarters for sales since the early 1990s, mainly because the spread between fixed annuity crediting rates and certificate of deposit yields was 2.31 percentage points, the widest since 1992, the analysts report.

The wide spread should help keep demand for fixed annuities strong, the analysts predict.