NU Online News Service, March 25, 10:15 a.m. – Banks reported higher annuity sales in January, ending a brief period of declining premiums, according to a new monthly survey by Kenneth Kehrer Associates, Princeton, N.J.
Sales of variable annuities continued to slip, but they showed definite signs of leveling off after a long decline.
Banks and thrifts set a monthly sales record for fixed annuities in January, increasing sales by 19% over December’s relatively low level, Kehrer reports. Sales rose to almost $3.2 billion, from $2.6 billion the month before.
January sales of fixed annuities were more than twice what they had been for the same month a year earlier, Kehrer finds. The previous record was $3.1 billion in October 2001.
The data show the typical bank sold $4.30 in fixed annuities in January for every $1 in VAs.
Brad Powell, president of the institutional marketing group at Jackson National Life Insurance Company, Lansing, Mich., says the popularity of fixed annuities is no surprise in view of continued uncertainty in the equity markets and the increasing yields of fixed products. Because annuity underwriters invest in longer-term securities, he observes, they can pay much higher rates than short-term bank certificates of deposit.
Investors are also showing more interest in variable products. Bank-sold VA premium was $814 million in October, then increased 6% to $862 million in November before falling back 16% in December to $724 million. Sales then rose 1% in January over December, to $731 million. January sales were, however, down 6% from year-ago levels.
An executive at Hartford Life, a subsidiary of the Hartford Financial Services Group, Inc., Hartford, which specializes in VAs, suggests financial advisors may not be doing their clients a favor by letting them invest heavily in fixed products.