Total Annuity Sales Fell In First Quarter: IRI

–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 year-earlier period. Net sales amounted to $3.4 billion. There were $21.7 billion in qualified sales and $9.6 billion in non-qualified sales in the first quarter.

The quarter-to-quarter decline in FA sales was due mainly to lower book value and [market value adjusted] 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.”

A year ago, FA sales hit a record high due to the safety and the strong rate advantage the products offer, “It’s not surprising that year-over-year results were down substantially,” Alexander says.

As to the VA results, Morningstar Inc. Director of Insurance Solutions Frank O’Connor says that while first quarter VA sales were off from fourth quarter, sales of products offering robust living benefit guarantees saw continued strength.

“Products offering lifetime guaranteed withdrawal benefits with value enhancers such as step-ups and bonus credits represented the lion’s share of sales,” he says.

IRI’s new combined reporting system for annuity sales provides a “holistic look” at FA and VA sales and should help identify emerging trends for all annuity product types, according to IRI President Cathy Weatherford.