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.