Combined sales of fixed and variable annuities were lower in the first quarter than in both the previous quarter and in the first quarter of 2009, an industry group says.
First-quarter combined sales were $47.4 billion, according to the Insured Retirement Institute, Washington.
That figure is down 6.9% from $50.9 billion in the previous quarter, and down 27% from $64.4 billion in the comparable quarter in 2009, IRI says.
IRI is reporting combined fixed and variable annuity sales results for the first time. The fixed annuity results are based on data from Beacon Research Inc., Evanston, Ill., and the variable annuity results are based on data from Morningstar Inc., Chicago, the association says.
Broken down by product line, the IRI report shows the following:
- First-quarter 2010 FA sales: These amounted to $16 billion, a 14.7% decline from $19 billion in the previous quarter, and a 51.9% decline from $34 billion in the first quarter of 2009. These results include sale of book value, market value adjusted, indexed and income annuities.
- First-quarter 2010 VA sales: These amounted to $31.4 billion, down 1.5% from $31.9 billion in the previous quarter–but up 3% from $30.4 billion in the first quarter of 2009. Net sales amounted to $3.4 billion, qualified sales to $21.7 billion, and nonqualified sales to $9.6 billion.
The quarter-to-quarter decline in FA sales “was due mainly to lower book value and MVA results,” says Beacon Research President Jeremy Alexander. “It appears that prospective buyers expected higher rates in the future and did not want to lock in first quarter’s credited rates.”
Although first-quarter VA sales were off from fourth-quarter sales, sales of products offering robust living benefit guarantees saw continued strength, according to Frank O’Connor, Morningstar director of insurance solutions.
For earlier IRI and Beacon annuity sales data, please see VA Sales Higher In Fourth Quarter Than In Third Quarter and Beacon: 4Q Fixed Annuities Sales Near $20B.