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September 02, 2010 at 08:00 PM
Bank annuity sales fell to $2.8 billion in June from $3.6 billion in the same month a year earlier, a monthly survey by Kehrer-LIMRA finds.
The drop was due to a sharp decline in fixed annuity volume. Kehrer-LIMRA, a research unit of LIMRA, Windsor, Conn., found fixed annuity (FA) sales fell from $2.5 billion in June 2009 to $1.5 million in June 2010, while variable annuity sales rose in that period from $1.1 billion to $1.3 billion.
A major reason for the decline in FAs in banks was a drop in the spread between the average five-year effective yield on FAs and interest rates offered by five-year certificates of deposit, Kehrer-LIMRA says. A year and a half ago, that spread had been 1.55%. By January, it had fallen to 0.21%. As of mid June, the yield was 0.16% below that level, the research organization found.
