NU Online News Service, Feb. 13, 3:55 p.m. – Annuity sales in banks continued to slump in December, reports Kenneth Kehrer Associates, Princeton, N.J., although on the bright side, they were about the same as November’s levels.

Bank annuity sales of $3.8 billion in December were up from $3.3 billion a year earlier.

Bank sales of annuities grew during most of 2003, reaching an all-time high of $4.5 billion in July. But sales slid in recent months. According to Kenneth Kehrer, whose firm conducts the survey, banks sold $2.8 billion in fixed annuities in December, up just 4% from November’s $2.7 billion.

Banks’ fixed annuity sales have been running at about this level since September, comments Brad Powell, president of Jackson National Life Insurance Company’s institutional marketing group, which sponsors the monthly survey.

Bank variable annuity sales were off 8%, their third consecutive monthly decline. While banks’ VA sales were just $1 billion, their sales were actually 42% above December 2001′s level of $724 million, the study reports.

Banks sold $2.80 in fixed annuities for every dollar of VA in December, up from $2.45 to $1 in November.

Kehrer notes that analysts expected that the low rates on fixed annuities would cause their sales to dry up. But fixed annuity crediting rates are still attractive relative to short-term CD rates, he adds, and even look good when compared to recent returns on equity investments.

The average base new money rate reported in the Kehrer Bank Fixed Annuity RateWatch was 3.34% in December, over 2.2 times the average yield on one-year CDs, before any bonus interest provided by the annuity.