Net annuity benefits paid by the top 50 annuity writers grew 9% in 2004 over 2003 and seemed poised to grow apace in 2005.
In 2004, net annuity benefits paid grew to $48 billion up from $44.1 billion in 2003, according to data culled from the National Association of Insurance Commissioners Annual Statement database via National Underwriter Insurance Data Services/Highline Data. Year-to-date 2005 results through 3rd quarter for the top 50 totaled $37.3 billion.
One industry expert says that one trend that may affect annuity benefits paid is the increase in premium financing. Premium financing is a transaction in which a substandard immediate annuity is purchased to pay the premiums on a life insurance policy, creating an arbitrage opportunity.
The question to ask, this expert says, is whether single premium immediate annuity sales are increasing.
At this point, LIMRA data indicates sales of fixed premium immediate annuities are flat, according to Howard Drescher, a spokesperson for LIMRA International, Hartford, Conn. In 2005, sales were $5.3 billion unchanged from 2004, he says.
The findings use the year-to-date 2005 results as a base factor for determining the top 50.
If annuity benefits paid are measured by direct benefits paid that do not take reinsurance transactions into consideration, total benefits paid also grew by 9% to $42.5 billion in 2004 compared with $46.9 billion in 2003.