The 1st quarter of 2007 saw variable annuity sales exceed $40 billion for the second time in a year. New sales of $40.1 billion were slightly lower than the record 2nd quarter 2006 new sales of $40.9 billion, but higher than 4th quarter 2006 new sales of $39.7 billion.
On a quarter over quarter basis, the top sellers of variable annuities remained relatively stable in terms of ranking and market share, although AXA Equitable notably moved into the number 2 spot with an 8.74% market share, up from 8.34% in the 4th quarter of 2006. Other top 15 companies with large gains in market share relative to 4th quarter were Pacific Life (5.65% to 6.19%) and Jackson National (4.88% to 5.16%).
The breakdown of sales by distribution channel does not reveal any major new trends, although it is worth noting that the regional, captive agency, and wirehouse channels have dropped slightly in the past year, while the independent financial planner and bank channels have gained. The bank channel was up just slightly, to 13.5% from 13.4% a year ago, while the increase in the independent financial planner channel was greater, rising to 34.2% from 31.7% in the first quarter of 2006.
Individual product sales reveal some interesting characteristics of today’s variable annuity market. Analysis of the top 10 products (by dollar increase in 1st quarter 2007 sales over 4th quarter 2006) reveals strong growth in several product designs. These 10 products represent about 18% of new sales (excluding TIAA-CREF) and include a wide variety of product structures and features.
AXA Equitable Accumulator Elite, an L-Share product with optional income and withdrawal benefits, had the largest quarter over quarter increase, $189.1 million. But AXA Equitable Accumulator Plus, RiverSource RAVA 4 Advantage, MetLife Investors Series XC, and Lincoln Choice Plus Assurance–all bonus products with traditional B-share structures–also saw large gains in sales. Hartford Leaders Outlook, Pacific Life Innovations Select, and AIG SunAmerica Polaris Choice III are 3 other L-share products with robust sales increases, but Fidelity Personal Retirement–a stripped down, low cost C-share product–also increased sales by over $95 million.
From the simple low cost structures to feature laden bonus contracts, it appears the current crop of variable annuities has something for everyone.