Total deferred annuity assets grew 1.2% during the first quarter of 2007, reaching nearly $1.97 trillion, reports LIMRA International, Windsor, Conn.
The figures come from a new LIMRA analysis that tracks industry deferred annuity net flows for variable annuities, fixed-rate annuities and index annuities each quarter.
The survey shows estimated inflows and outflows (full surrenders and others) for all 3 product types, points out Eric Sondergeld, corporate vice president and director of retirement research (see Table 1). It also includes quarterly earnings for the 3.
The combined effect shows how the annuity industry is growing or contracting, and in which product line, Sondergeld says.
The data comes from annuity companies that elected to contribute date to the LIMRA survey. Individual companies can benchmark their own asset growth/contraction against the industry numbers, Sondergeld points out.
In the 1st quarter survey, deferred index annuity assets showed the largest percentage increase: up 5.9% to $109.1 billion, from December 31, 2006 to March 31, 2007, the survey shows.
Meanwhile, deferred variable annuity assets grew by 2% to $1.4 trillion in the same period, but deferred fixed annuity assets contracted by 2.3%, to $450.5 billion.
According to the survey, the FA contraction resulted from FA outflows (4.7%) exceeding inflows (1.7%), Sondergeld says. Three percent of the outflows were attributed to full surrenders. FA earnings were up 1% for the quarter, but not enough to offset the net outflow.
Since inflows and full surrenders are within a company’s control–by spurring sales on the inflow side and influencing the direction of surrenders–companies can use the results in deciding how to maximize assets, he says.
Is the industry showing a healthy level of asset growth? Sondergeld thinks the numbers are reflective of what happens in the life cycle of products.