Fixed annuity sales dropped 20% in second quarter 2009 from the previous quarter but they were 10% higher than in second quarter 2008, says a new study.
FA sales reached an estimated $27.8 billion in second quarter 2009, says Beacon Research, Evanston, Ill. in its new Fixed Annuity Premium Study.
The second quarter 2009 study covers sales of 53 insurance companies in the U.S. The companies represent an estimated 86% of the FA market, according to Beacon.
On a year-to-date basis, total market sales were an estimated $62.6 billion in 2009, 39% above first-half 2008, according to the study.
By annuity type, the study says that estimated second quarter 2009 sales were: book value, $14 billion; indexed, $8.2 billion; market value-adjusted (MVA), $3.5 billion; and fixed income (immediate and deferred annuities), $2.2 billion. (Book value products pay a declared rate of interest for a specified period and do not apply market value adjustments upon early withdrawals.)
The report compares estimated FA sales to previous periods and products, as follows:
Compared to the previous quarter: Indexed annuity sales were up 16% and income annuity sales were up 12% in second quarter 2009, while MVA annuity sales dropped 47% quarter to quarter, and book value annuities fell 27%.
Compared to second quarter 2008: Indexed annuity sales rose 20% in second quarter 2009; book value and fixed income annuities rose 10% and 2%, respectively; but MVA annuity sales fell 5%.
Compared to first half 2008: MVA sales were up 68% in the first half of 2009; book value annuities, up 48%; indexed annuities, up 22%; and fixed income sales, up 4%. (Note: by dollars, first-half 2009 sales were: book value annuities, $33.2 billion; indexed annuities, $15.3 billion; MVA annuities, $10 billion, and fixed income annuities, $4.1 billion.)
Beacon observes that indexed annuities took a 30% share of sales in second quarter 2009, reversing a five-quarter decline. But these sales are still below 2007 levels, the researchers say.
Also, credited rates on fixed annuities were low, and they declined somewhat during the second quarter, according to Beacon. “It was increasingly difficult to find annuities crediting at the threshold 5% level,” the researchers say.
As for sales leaders, New York Life advanced to first from second place to reclaim sales leadership from MetLife, says Beacon. Aviva USA took second place, and Allianz third. AEGON/Transamerica came in fourth, and American Equity, fifth.