Bank sales of annuities dropped to $3.9 billion in July, from $4.1 billion in July 2003.[@@]
Kenneth Kehrer Associates, Princeton, N.J., has published those statistics in its latest review of the bank annuity market.
Changes in product terms and stock market volatility may have contributed to increased customer interest in more conservative products.
Bank variable annuity sales fell to $1.5 billion, from $1.7 billion in July 2003, while bank sales of fixed annuities rose to $2.5 billion, from $2.4 billion.
Although fixed annuity sales were up and variable annuity sales were down when compared with July 2003 results, Kenneth Kehrer, whose form conducts the monthly survey, notes that FA sales were down from $2.9 billion in June 2004 and that VA sales held steady between June 2004 and July 2004.
Bank VA sales have been fairly flat for the 3 months ending in July, while bank FA sales increased during 4 of the 5 previous months, Kehrer says.
Brad Powell, president of the institutional marketing group at Jackson National Life Insurance Company, Lansing, Mich., which sponsors the monthly survey, says reduced fixed annuity interest rates are responsible for the decline in July bank FA sales.
The reduced rates made bank certificates of deposit look more attractive to many investors, Powell says.
“The spread between fixed annuities and 1-year CDs shrank from 179 basis points in mid-June to 165 basis points in mid-July,” Powell says.