Banks sold $3.2 billion in fixed and variable annuities in May, down 27% from the $4.4 billion total for May 2004.[@@]
Bank and savings institution VA sales fell to $1.3 billion, from $1.5 billion, but the decline was even steeper in the FA market, according to Kenneth Kehrer Associates, Princeton, N.J.
Bank FA sales sank to $1.9 billion, from $2.9 billion, Kehrer estimates in its latest bank annuity sales survey report.
Jackson National Life Insurance Company, Lansing, Mich., sponsors the monthly survey series.
Current low interest rates are hurting bank FA sales, says Brad Powell, president of institutional marketing at Jackson National.
“The average 1-year guaranteed crediting rate on new money invested in fixed annuities dropped from 3.13% in mid-April to 3.08% in mid-May,” Powell says.
Meanwhile, the spread between FA crediting rates and interest rates on 1-year bank certificates of deposit has declined from 0.62 percentage points in mid-January to only 0.40 percentage points in mid-May, Powell says.
Banks sold $1.52 in fixed annuities for every dollar of variable annuities in May, down from a ratio of $1.93 in fixed annuities for every dollar of variable annuities a year earlier.