NU Online News Service, May 11, 2004, 10:25 a.m. EDT – Banks sold nearly $4.5 billion of annuities in March, just 5% shy of the record monthly sales of $4.7 billion achieved in March 2003.[@@]
Month-to-month sales were up significantly as annuity sales in banks surged by 24% in March over February’s $3.6 billion, according to the monthly survey by Kenneth Kehrer Associates, Princeton, N.J.
Sales of both fixed and variable annuities have improved for 2 straight months, notes Kenneth Kehrer, whose firm conducts the survey.
“This is a break from the recent past where we have observed a teeter-totter effect, with sales of fixed annuities moving in the opposite direction of VA sales,” says Kehrer. “When one went up, the other went down.”
VA sales of $1.65 billion for the month were actually slightly above the level for March 2003, when banks sold $1.6 billion worth, Kehrer reports.
Sales of fixed annuities, however, were down slightly from year-earlier levels. U.S. banks and savings institutions sold $2.8 billion in fixed annuities in March, 10% below the year-earlier level of $3.1 billion.
Fixed product sales in banks were up 26% over February’s $2.2 billion. However, they were 20% below the record monthly level of $3.5 billion reported by banks in both May and July of 2002.
Fixed annuity sales in banks usually are influenced by the point spread between the interest rates offered on fixed annuities and 1-year bank certificates of deposit.
That spread shrank from 1.8 percentage points in mid-January to 1.65 percentage points in mid-March, notes Brad Powell, president of the institutional marketing group at Jackson National Life Insurance Company, Lansing, Mich., which sponsors the survey.