Variable annuity new sales were $33.2 billion in the 2nd quarter of 2005, a 5.8% increase over 1st quarter sales of $31.1 billion and almost equal to 2nd quarter 2004 sales of $33.3 billion.
As a result of strong 1st quarter 2004 new sales of $34.4 billion, 2005 mid-year total new sales of $64.5 billion lag the mid-year 2004 total of $67.7 billion by 4.8%.
It seems likely that 2005 variable annuity new sales will be roughly equal to the $128.5 billion recorded in 2004.
Of the Top 25 companies, the five companies with the greatest sales momentum in 2005, as measured by the ratio of 6/30/05 year-to-date sales to 2004 full-year sales, are as follows: MetLife (including Travelers), 68.4%; IDS Life, 67.7%; Ohio National, 65.5%; Northwestern Mutual, 62.5%; and Jackson National, 61.3%.
MetLife’s market share increased 36.1% in the 6/30/05 year-to-date period vs. 2004; IDS, 34.8%; Ohio National, 30.3%; Northwestern Mutual, 24.5%; and Jackson National saw a 22% increase in new sales market share.
The acquisition of Travelers Life & Annuity Company by MetLife further consolidates variable annuity sales within the Top 25 companies in the industry, with 96.3% of year-to-date sales accounted for by this group. There are a total of 48 parent companies tracked in the VARDS database. This contrasts with an 87.3% market share for the Top 25 and 67 parent companies five years ago (6/30/00 year-to-date figures).
The distribution of sales by share class in the 6/30/05 year-to-date period did not change dramatically vs. 2004. Bonus product sales were unchanged at 27.1% of total sales, B shares dropped from 30.8% to 28.6%, and C shares dropped from 4.3% to 3.6%. L shares continue to gain ground, increasing from 16.4% of total sales in 2004 to 17.6% in the first half of 2005.
Guaranteed living benefits, and in particular the Guaranteed Minimum Withdrawal Benefit (GMWB), continue to play a significant role in driving variable annuity sales. Of the $54.6 billion in non-group variable annuity sales reported for the 6/30/05 year-to-date period, $42.5 billion, or 78%, offered a GMWB.
The Guaranteed Minimum Income Benefit (GMIB), though not as widely available as the GMWB, was available in contracts representing 52.3% of sales over the period, while the least common living benefit, the Guaranteed Minimum Accumulation Benefit (GMAB), was available in 28% of non-group contracts sold.