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September 07, 2008 at 04:00 PM
Index annuity sales in the 2nd quarter 2008 jumped 20% over the 1st quarter and 5.55% over the 2nd quarter 2007, according to the Advantage Index Sales & Market Report.
Sales of the fixed version of the product–fixed index annuities–totaled nearly $7 billion for the quarter, according to AnnuitySpecs.com, Pleasant Hill, Iowa, publisher of the report. The average FIA premium was $52,460.
Sales of the only registered product–a registered index annuity from Phoenix Companies–came to nearly $7.7 million for the quarter.
For the first half of 2008, the numbers still show increases, but they are not as dramatic.
At $12.7 billion, total FIA sales rose in the first 6 months of 2008 by just 3.23% over the same year-earlier period, the report says. (Total RIAs sales were $14.5 million in the 6 months, but no comparison figures are available for first-half 2007 RIA sales since the product was not yet being sold.)
The top 5 sales leaders for the first half 2008 were Aviva, Allianz Life, American Equity, Midland National Life, and Old Mutual, the report says. By comparison, the top 5 leaders for 2Q were Aviva, Allianz Life, American Equity, Midland National Life and North American Company, together holding nearly 61% market share.
The survey covers results of 58 FIA providers and the one RIA provider. This represents roughly 98% of all active index annuity companies, says AnnuitySpecs President Sheryl Moore.
She attributes the sharp rise in 2Q results to the industry’s introduction of enhanced first-year premium bonuses, which can often run as high as 10%.
The new products have become very popular, particularly in the “10-10 states,” says Moore. So-called 10-10 states require FIAs to have a 10-year surrender charge, starting at 10% in year one and declining to zero after year 10. This design qualifies FIAs for placement on many broker-dealers’ approved products lists, she notes.
The new bonus features use 2 designs, Moore says.
