Contrary to expectations of many observers, equity index annuity sales did not sag in the 2nd quarter of 2001. In fact, on an industrywide basis, they broke their previous quarterly record (first quarter 2000).
According to the report, 2Q 2001 EIA sales reached over $1.602 billion, eclipsing the $1.517 billion recorded for the 1Q 2000.
Furthermore, the 2Q total is up 27.21% over the 1Q 2001 total, and up 14.76% over the 2Q 2000 total, says Jack Marrion, owner of Advantage Group.
These figures reflect premium volume of 44 EIA carriers. “These carriers represent 93% of the active EIA companies and 99% of total EIA sales industrywide,” Marrion says. Results for three of the 44 are estimated, he notes.
EIAs are fixed annuities that link their credited interest (the interest paid above the guaranteed minimum) to performance of an equity index.
Many EIA watchers, even some EIA executives, had been bracing for less stellar results than what actually occurred. Sales in the preceding three quarters had fallen below previous highs (see chart), and these executives had expected more of the same in 2Q 2001.
The continuing volatility in the stock market was the chief reason for that prediction. The thinking was that the close association EIAs have with the stock market, due to their index-linking crediting method, would be a turnoff to potential buyers.
Some companies did see sales declines, Marrion concedes. But others saw huge increases. (See chart.)
For example, the 2Q sales leader, Allianz Life Insurance Company of North America, Minneapolis, saw EIA sales leap 42.10% over the 1Q, to $335.4 million in premium.
The annuity division of Midland National Life Insurance Company, West Des Moines, Iowa, came in second, with EIA sales soaring 63.05% to $281.1 million in premium.
American Equity Life Insurance Company, Des Moines, Iowa, came in third, with EIA sales rising 49.80% to $227.5 million in premium.