Third quarter new variable annuity sales of $36.5 billion were off almost 11% from the 2nd quarter’s record high of $40.9 billion. With the exception of an 11% increase in quarterly sales reported by RiverSource Annuities (formerly Ameriprise), the drop was industry-wide. However, with 3rd quarter year-to-date sales at $115.2 billion, the industry is still at a historic high.
With quarterly sales continuing to hover around historic highs, it seems likely that industry sales will reach or exceed $150 billion in 2006.
While a fall in sales volume was almost inevitable given highs reached in the 1st and 2nd quarters, the more intriguing statistic is the 13.4% increase in net cash flow. Net flow has been rising steadily this year: 1st quarter net flow was $7 billion; 2nd quarter was $8.2 billion; and 3rd quarter was $9.3 billion. In fact, 3rd quarter year-to-date net flow of $24.5 billion is already 20% higher than net flow for all of 2005. It is too early to predict a surge in new money being attracted to the industry, but this is nonetheless a positive trend after several quarters of decline.
Among the top selling companies there was some shift in rankings in the 3rd quarter. RiverSource Annuities jumped from 11th to 5th on their strong sales, while MetLife Companies fell from the number 1 spot to 3rd place. TIAA-CREF and AXA Financial each jumped one spot to claim the 1st and 2nd slots, respectively. Hartford Life continued to occupy the 4th position.
While all companies except RiverSource saw a decline in quarter over quarter sales, among the Top 25 companies the top 5 market share gainers were RiverSource, with a 24.7% increase; Sun Life with 10.4%; Genworth with 10%; Nationwide with 9.8%; and Ohio National, with a 9.6% increase in market share.
On a year-to-date basis, and excluding contracts used exclusively or primarily in group plans such as 403(b), the top 5 contracts, with a combined non-group market share of 16.7%, were John Hancock Venture III, with new sales of $4.3 billion; Jackson National Perspective II at $3.3 billion; RiverSource Annuities Retirement Advisor Advantage (RAVA) Plus at $3.2 billion in new sales; Pacific Life Innovations Select at $3.2 billion; and AXA Equitable Accumulator Elite at $2.3 billion.
Venture III, Innovations Select, and Accumulator Elite are L-share (limited surrender charge period contracts) while also offering living benefit guarantees, suggesting that protection against investment loss combined with increased liquidity is resonating with investors.