NU Online News Service, Aug. 15, 4:46 p.m. – Bank variable annuity sales increased to $1.2 billion in June, up 6% from May and up 34% from June 2001, according to a survey by Kenneth Kehrer Associates, Princeton, N.J.
The June survey, which was sponsored by Jackson National Life Insurance Company, Lansing, Mich., showed that recent signs of a rebound in the variable annuity market were more than a fluke.
“All bank VA sales were up for the second consecutive month and the third time in the past four months,” says Brad Powell, president of Jackson National’s institutional marketing group.
But bank sales of fixed annuities fell to $3.3 billion, down 8% from the record level reported in May. Because fixed products account for 73% of all bank annuity sales, total bank annuity sales were off by 4.7% from May, falling to $4.5 billion, from $4.8 billion.
Banks took in $2.77 from sales of fixed annuities in June for every dollar they generated from selling variable annuities, but the ratio was down from 3.19-to-1 in May.
Banks managed to increase VA sales even though their mutual fund sales were down 22%.
One reason for the resurgence in variable annuities was that many of the new products sold through banks have features that limit the investors’ investment risk, Powell says.
Another reason was that some major carriers are making contract designs more flexible, to give investors more ability to decide which features they want to pay for. The new options include guaranteed minimum income benefits, increased access to assets, a selection of death benefit protection levels and shortened withdrawal charge periods.
On the fixed-annuity side, June sales might have been lower than May sales, but June sales were still 45% higher than June 2001 sales, Kehrer says.