NU Online News Service, June 3, 2003, 12:40 p.m. EDT – U.S. variable annuities attracted $29 billion in premiums during the first quarter, up from $27 billion in premiums during the first quarter of 2002, according to the National Association for Variable Annuities, Reston, Va.

Because withdrawals also increased, the net flow of cash into variable annuities fell to $7.5 billion, from $8.1 billion, but the total flow was up 11%.

Consumers put 60% of their premiums in individual retirement accounts and other retirement accounts that qualify for special tax treatment. Forty percent of the premiums went into non-qualified plans, NAVA says.

Because of the lingering effects of the 2002 stock market slump, total VA net assets fell to $796 billion March 31, down from $891 billion a year earlier.

Other reports have suggested that variable annuities might be starting to recover some of the ground they have lost to fixed annuities during the stock market slump. But NAVA says consumers who put money in variable annuities are still edging away from stocks: the percentage of assets in fixed VA accounts increased to 31% at the end of the first quarter, up from 29.5% at the end of 2002. The percentage of assets in stock accounts fell to 46%, from 48%.