Banks are reporting a sharp drop in April annuity sales.[@@]
Total bank annuity sales fell 9% from the April 2003 total, to $3.9 billion, according to Kenneth Kehrer Associates, Princeton, N.J.
Bank fixed annuity sales fell 8%, to $2.4 billion, and bank variable annuity sales fell 12%, to $1.5 billion.
Bank sales of fixed and variable annuities have been moving in the same direction at the same time since February, according to Kenneth Kehrer, whose firm conducts the bank annuity sales surveys.
“Typically, we observe a see-saw effect, with sales of fixed annuities moving in the opposite direction of VA sales,” Kehrer says.
At least part of the fixed annuity decline can be explained by a narrowing of the difference between fixed annuity interest rates and rates on 1-year bank certificates of deposit, says Brad Powell, president of the institutional marketing group at Jackson National Life Insurance Company, Lansing, Mich., which sponsors the monthly survey.
The fixed annuity-CD spread shrank to 1.46 percentage points in mid-April, down from 1.8 percentage points in mid-January, Powell says.