Fixed Annuity Sales Hit Record $71.5 Billion In 2001
Sales of fixed annuities reached an all-time record of $71.5 billion in 2001, growing at a 36% clip, according to preliminary estimates just out from LIMRA International, Windsor, Conn.
The growth rate accelerated during the year, despite annuity interest rates falling nearly a full percentage point from December 2000 to December 2001. Comparing quarterly results, 2001 to 2000, fixed annuity sales grew by 15% in the 1st quarter, increasing to 73% in the 4th quarter.
FA sales have actually been on the rise since 1998, which had the lowest sales since 1987.
What Your Peers Are Reading
This steady growth involves all types of FAs. Book value deferred annuities grew 45%, faster than any other type of FA (see chart). Market value adjusted annuities growth slowed in 2001 after nearly doubling during each of the previous two years. In the first half of 2001, sales of payout products–immediate annuities and structured settlements–increased rapidly; however, during the second half, their sales were relatively flat, ending the year at $3.4 billion and $6.3 billion, respectively.
Sales of variable annuities, on the other hand, declined 18%, ending the year at $112.8 billion. This, after five consecutive record sales years. The only VA growth area last year was in VA fixed accounts, which grew 15%.
Total annuity sales–FAs and VAs combined–fell just 3% last year from $189.9 billion in 2000 to $184.3 billion last year.