Total U.S. sales of fixed annuities fell to about $17 billion in the first quarter, down 4% from the total for the first quarter of 2005.

But sales of equity-indexed annuities increased 13%, to $7.2 billion, according to Beacon Research Inc., Evanston, Ill.

Beacon bases its figures on a survey of 51 insurance companies.

Interest rates are higher than they were and the yield curve is steeper, and that should help insurers increase FA sales this year, according to Jeremy Alexander, Beacon’s chief executive.

Steeper yield curves, or a bigger difference between rates on short-term fixed-income instruments and long-term fixed-income instruments, help FA sellers, by increasing their ability to use their own investments in long-term instruments to offer attractive rates on short-term fixed annuities.

Beacon also detected a continuing shift by purchasers of market-value adjusted fixed annuities away from 1-year interest guarantee periods.

The percentage of MVA annuity buyers choosing 1-year guarantee periods fell to 22%, from 40% in the first quarter of 2005.

The percentage of book value FA buyers who chose 1-year-guarantee periods fell only slightly over the same period, to 83%, from 85%.

An MVA fixed annuity pays a declared rate of interest for a specified period. When a holder takes some or all of the assets out of an MVA annuity during the annuity contract term, the issuer exposes the holder to some interest rate risk by adjusting the market value of the annuity to reflect changes in a specified interest rate benchmark, according to Beacon.

Book value fixed annuities also pay a declared rate of interest for a specified period, but the issuer does not impose a market value adjustment if the holder takes out some or all of the assets out of the annuity before the end of the contract term, Beacon says.

When FA buyers shift toward multi-year contracts, that may be a sign that the multi-year rates seem attractive, or that buyers expect interest rates to fall or hold steady.