Fixed Annuity Sales In 2nd Quarter Match Variable Annuity Sales
Fixed annuity sales reached $29.5 billion in the 2nd quarter of this year, setting a new record for sales in a single quarter for the fifth consecutive quarter.
The continuing explosion in FA sales enabled the products to match variable annuity sales in the 2nd quarter. Its a notable turnabout, since FAs last outsold VAs in a single quarter seven years ago, and it has been a full decade since FA sales surpassed VA sales for a full year.
The increase in marketshare for FAs–from 45% in the 1st quarter to 50% in the 2nd quarter–occurred while VAs posted their first sales increase in five quarters (Note: The increase in VA sales is based on a comparison of sales in the current quarter to sales in the same quarter of the previous year.)
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The 4% increase in VA sales over the 2nd quarter of 2001 reflects a 24% increase in contributions to fixed subaccounts. Meanwhile, contributions into variable accounts fell by 4%.
The combined results, for FA and VA sales in the 2nd quarter, produced the highest sales quarter ever for overall annuity premiums–$59 billion.
Driving these results were the guarantees offered in todays annuities. During uncertain economic times, such guarantees make annuity products especially appealing.
Fixed deferred annuity sales increased 76% in the 1st half of 2002–when compared to the same period last year–to reach $48 billion.
Within the fixed deferred product type, market value adjusted annuities more than doubled in sales to $10 billion, equity indexed annuities rose by 72% reaching $5 billion, and book value deferred annuities increased by 69% with $33 billion in sales.
Fixed immediate annuity sales grew at a less impressive pace of 22% and reached $2.2 billion in the 1st half of 2002.
An additional $2.4 billion in premium was received through structured settlements sales. This constituted a 27% decline from the 1st six months of 2001, and the structured settlement annuity was the only fixed product type to see a decrease compared to the prior year.