Second quarter annuity sales in the U.S. have hit record highs, according to a report issued earlier this week by the Insured Retirement Institute, the annuity industry’s main trade group.
The report, which blends data from both Morningstar and Beacon Research, notes that 2Q 2010 annuity sales increased 13.5% from last quarter, from $47.4 billion to $53.8 billion. The gains were even greater for fixed annuities, which rose in 2Q 17.7%, from $16.5 billion to $19.4 billion.
According to Beacon Research, the fixed annuities numbers were strong because of widening spreads between Treasury and corporate bond yields, which let fixed annuities offer competitive credit rates. For buyers frustrated at stagnant rates, this was a compelling reason to invest in fixed annuities.
Variable annuities fared less well, but still posted an increase of some 9%, from $31.6 billion in Q1 to $34.4 billion in Q2. Mirningstar suggests that the floor against losses is doing much to drive these numbers, while advisors continue to see variable annuities as being both profitable for their own businesses as well as providing their clients with substantial opportunity for growth. Thanks to factors like these, quarterly variable annuity sales are up year-to-year by 8.2%, from $31.8 billion in Q2 2009. But that might be where the good news ends.