AIG SunAmerica Asset Management Corp., New York, led all carriers in annuity sales in banks in the second quarter of 2004.[@@]

AIG sold more than $2.8 billion worth of annuities in banks in the quarter, up 30% from $2.2 billion in the second quarter of 2003, according to Kenneth Kehrer Associates, Princeton, N.J.

The strongest annuity growth in the bank channel was registered by Lincoln National Life Insurance Company, Fort Wayne, Ind., which increased sales 279% from year-earlier levels, to $91 million.

Robust bank growth also was reported by the following companies:

  • New York Life Insurance Company, New York, from $249 million to $676 million.
  • Massachusetts Mutual Life Insurance Company, Springfield, Mass., from $79 million to $255 million.
  • Prudential Financial Inc., Newark, N.J., from $120 million to $267 million.
  • Principal Financial Group Inc., Des Moines, Iowa, from $80 million to $185 million.

Most of the growth came from sales of fixed annuities, according to Kenneth Kehrer, head of the firm that bears his name.

“It was a bad quarter for variable annuities,” Kehrer says.

Although half of carriers were able to increase VA sales by expanding into more banks, 11 of the top 22 bank VA firms saw sales of the product plummet in the channel. For instance, American Express Financial Group, Minneapolis, reported $199 million in VA sales in banks in the most recent quarter, down from $495 million in the same period last year, while New York Life saw these sales drop from $67 million to $19 million.

Fixed annuity sales, on the other hand, showed strong growth for a number of carriers. Between the second quarter of 2003 and the same period this year, for instance, New York Life saw FA bank sales climb from $182 million to $661 million, while MetLife Investors, the annuity unit of MetLife Inc., New York, saw these sales rise from $301 million to $541 million.

The key to this growth was a wider spread between the interest rates carriers paid on their FAs and the rates paid by bank certificates of deposit, says Kehrer.

“New York Life and MetLife offered very competitive interest rates in the quarter,” he says.