NU Online News Service, Jan. 2, 3:45 p.m. – Bank sales of variable annuities fell to $1.1 billion in October 2002, from $1.7 billion in September 2002, according to Kenneth Kehrer Associates, Princeton, N.J.
Bank sales of all annuities were only slightly lower in October 2002 than they were in October 2001, because banks sales of fixed annuities increased to $2.8 billion in October, from $2.6 billion in the previous month.
But the fixed annuity sales total was the second lowest since February, notes Kenneth Kehrer, whose firm conducts the survey for Jackson National Life Insurance Company, Lansing, Mich.
“The very low interest-rate environment may be constraining sales,” Kehrer says.
Several large VA manufacturers cut crediting rates for fixed subaccounts between September and October. The drop in VA sales in October suggests that many of the consumers who bought variable annuities in September put their money in fixed subaccounts, Kehrer says.
“We estimate that much more than half of the bank VA premium was deposited in fixed subaccounts during the third quarter,” Kehrer says.
Banks sold $2.55 in fixed annuities for every dollar of VA sales in October, up from a ratio of $1.87-to-$1 in September, Kehrer reports.