NU Online News Service, Nov. 20, 1:45 p.m. – Despite the shakiness of the stock market, banks’ sales of variable annuities staged a comeback in September, while banks’ fixed-annuity sales continued their recent slump, according to the “Kehrer-Jackson National Monthly Bank Annuity Sales Survey.“
VA sales have been a distant second in banks to FA sales over the past two years, Kenneth Kehrer Associates, Princeton, N.J., says in the latest survey report.
But bank VA sales increased to about $1.5 billion in September, from $900 million in August, while bank FA sales fell to $2.8 billion, from $3.2 billion, the research firm says.
Banks sold $1.87 in fixed annuities for every dollar of variable annuities sold in September, down from a $3.44-to-$1 ratio in August, the firm says.
“Considering that the equity markets were still spiraling down in September, VAs showed surprising strength,” comments Brad Powell, president of the institutional marketing group at Jackson National Life Insurance Company, which sponsors the monthly survey. “One factor might be that fixed-annuity rates finally sank to levels that could be considered unattractive to investors.”
The Kehrer firm reports the average base new money rates on fixed annuities fell to 3.68% in September. Although a fixed annuity still pays twice as much as the average one-year certificate of deposit, fixed annuities’ rate advantage has been shrinking in recent months.
Kenneth Kehrer, whose firm conducts the survey, thinks, too, that publicity about the financial effect of guarantees on VA underwriters might have created a “fire sale atmosphere.”