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December 16, 2001 at 07:00 PM
3rd Quarter Sales Of Fixed Annuities Soared 35% Over Last Year
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Fixed annuity sales continued to surge in the 3rd quarter of 2001, according to a report just out from LIMRA International, Windsor, Conn.
Sales of the product rose by 35% in the 3rd quarter, compared to the same quarter last year, and by 25% year-to-date, says Eric T. Sondergeld, corporate vice president and director of LIMRAs Retirement Research Center.
Total fixed annuity sales for all three quarters reached $50.1 billion, he notes. “In the 3rd quarter alone, they hit $18.2 billion, the highest quarter ever for these products.”
This strong growth occurred despite the fact that average new money rates fell by nearly 1% in the past year, Sondergeld points out.
The continuing turbulence in the stock market was a key factor, he suggests. “Many people today see a lower positive return (in the fixed annuity product) as better than losing money in equities.”
Stock market turbulence may have also contributed to two other significant annuity sales trends:
“First, variable annuity sales for the first three quarters of this year fell by 20%, to $84.3 billion,” Sondergeld says. In fact, he says, VA sales have decreased for six consecutive quarters, when compared to previous quarters. (In the 3rd quarter of 2001, VA sales came to $26.5 billion.)
Second, overall annuity sales (including both VA and FA contracts) actually declined by 8% for the first three quarters of 2001, compared to the same period last year, in large part due to the VA sales decline, says Sondergeld.
But the stock market doldrums didnt hurt the entire variable annuity market. Sales of variable income annuities actually rose by 16%, to $800 million in the first three quarters of 2001, according to Sondergeld.
