NU Online News Service, Feb. 26, 2:29 p.m. – The combined net assets of U.S. variable annuities shrank 7.7% in 2001, to $893 billion, according to the National Association for Variable Annuities, Reston, Va.

Total new VA sales fell 9.2%, to $28 billion.

But variable annuities have showed some signs of making a comeback.

VA assets actually increased 8.5% between the beginning and end of the fourth quarter, and fourth-quarter sales were up 2.3% from third-quarter sales, NAVA says.

The stock market volality has had a noticeable effect on annuity holder investment stragies.

The share of VA assets held in stock accounts fell to 59% of total assets at the end of 2001, from 65% a year earlier, while the share in fixed accounts increased to 22%, from 19%.

The share in balanced accounts held steady at 8.4%.