Fixed annuity sales plummeted 51.9% in the first quarter of 2010 compared to a year ago, the Insured Retirement Institute (IRI) said in its first-ever quarterly annuity sales report, released Tuesday, May 18, with data provided by Morningstar Inc. and Beacon Research.
The 51.9% decline in year-to-year quarterly sales of fixed annuities reflected an $18 billion drop from $34.8 billion in the first quarter of 2009. Fixed annuity sales for the first quarter were about $16.7 billion, down from $19.6 billion as of December 31, 2009, representing a 14.7% quarterly decline.
“A year ago, fixed annuity sales hit a record high because of the flight to safety and strong fixed annuity rate advantage. It’s not surprising that year-over-year results were down substantially,” said Beacon Research President and CEO Jeremy Alexander in a release. “The quarter-to-quarter drop in fixed annuity sales was due mainly to lower book value and MVA results. It appears that prospective buyers expected higher rates in the future and did not want to lock in first quarter’s credited rates.”
Compared to fixed annuity sales, overall annuity sales also were off. Year-to-year quarterly sales of overall annuities were down 27%, declining from $64.4 billion in first-quarter 2009. Sales for the first quarter were $47.4 billion, down from $50.9 billion in the previous quarter, representing a 6.9% decline.