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Retirement Planning > Retirement Investing > Annuity Investing

Individual Annuity Sales Fall 24%: LIMRA

By Linda Koco

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Total U.S. individual annuity sales in first quarter 2010 fell 24% from the first quarter of 2009, according to LIMRA.

First-quarter sales were also down by 5% from the previous quarter, says LIMRA, Windsor, Conn.

Total sales for the first 3 months amounted to $51.4 billion.

This is the fourth consecutive quarter of annuity sales declines, LIMRA researchers say.

For other recently released annuity sales reports, please see AnnuitySpecs: Q1 Indexed Annuity Sales Off 4% and Annuity Sales Fall: IRI.

For variable annuity sales, the LIMRA researchers have broken out these results:

- At $32.4 billion, VA sales improved 5% in the first quarter compared with results from the comparable period in 2009, but they fell 2% when compared with results from the fourth quarter of 2009.

- Separate account products accounted for $25.5 billion of the first-quarter total, up 22% from a year ago, while the fixed account products attracted just $6.9 billion, down 32%.

Fixed annuity sales amounted to $19.0 billion.

- FA sales fell 48% in the first quarter when compared with results from the first quarter of 2009, when FA sales hit a record high, and they fell 10% from the total recorded in the fourth quarter of 2009.

The first-quarter fixed annuity total includes the following highlights.

- Indexed annuities: $7 billion. IA sales fell 3% in the first quarter from the first quarter of 2009, but they matched the sales total for the fourth quarter of 2009.

- Book value annuities:$7.6 billion. BVA sales dropped 60% from the same year earlier period and 20% from the previous quarter.

- Market value adjusted annuities:$1.3 billion. MVA sales fell 81% from the total recorded in the first quarter of 2009, and 13% from the total recorded in the fourth quarter of 2009.

When VA sales plummeted a year ago, FA sales achieved record growth, so overall individual annuity sales were positive, says Joe Montminy, assistant vice president-annuity research at LIMRA. But now, despite steady VA sales over the last year, “shrinking interest rate spreads have undermined fixed annuity sales–causing total annuity sales to hit an eight-year low this quarter,” Montminy says.

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