Banks are selling almost 3 times as many equity indexed annuities as they did a year ago, according to a report by Kenneth Kehrer Associates.[@@]

Banks sold $495 million worth of EIAs in the second quarter, compared to $181 million a year earlier, according to Kehrer, Princeton, N.J.

Banks accounted for almost 7% of total EIA premiums in the quarter, up from a share of about 5% for the comparable quarter in 2004.

EIAs are growing in popularity among bank customers because traditional fixed annuities are offering relatively low returns, while variable annuities are too risky for the typical bank client, says Alan Blank, president of Midwood Financial Inc., Naples, Fla., which sponsors Kehrer’s EIA studies.

Insurers that issue EIAs say they will guarantee return of principal while giving the investor a chance to earn returns based upon the performance of an equity market index, such as the S&P 500.