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VA sales show signs of recovery, at long last

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Variable annuity sales increased 11 percent in the second quarter of 2010, as compared to the prior year, to reach $35.5 billion, according to LIMRA’s U.S. Individual Annuities Second Quarter 2010 Sales Report, which represents 96 percent of the market.

VA sales were 10 percent higher than sales in the first three months of 2010. For the first six months of 2010, VA sales improved 8 percent compared to the first half of 2009, totaling $67.9 billion.

“After five consecutive quarters where VA sales were lingering in the $31-33 billion range, we are finally seeing signs of recovery as VA sales jumped more than $3 billion in the second quarter,” says Joe Montminy, assistant vice president for LIMRA’s annuity research. “In addition, there was broad market growth as most companies in the top 20 experienced VA sales growth this quarter — whereas last year we saw growth concentrated with the top five carriers.”

Fixed-annuity sales continued to decline in the second quarter, down 26 percent compared to the second quarter of 2009, when total fixed-annuity sales were much stronger. However, compared to the first quarter, fixed-annuity sales improved 13 percent to $21.5 billion in the second quarter of 2010 and $40.5 billion year-to-date. After a slight drop in the first quarter of 2010, second-quarter indexed annuity sales matched the record levels hit in the second quarter of 2009. Market volatility and the low-interest rate environment continued to drive sales of indexed annuities, which reached $8.2 billion in the second quarter.

Book value annuity sales dropped 43 percent in the second quarter of 2010, totaling $8.1 billion,but improved 7 percent from the first quarter. Second-quarter MVA sales of $1.6 billion were down 54 percent from second quarter 2009. Fixed immediate annuity sales were $2.1 billion, and structured settlement sales reached $1.5 billion in the second quarter of 2010.

Total annuity sales were down 7 percent in the second quarter compared to the second quarter of 2009 to $57.0 billion. However, total annuity sales grew 11 percent over the first quarter, marking the first quarterly increase in total annuity sales since the fourth quarter of 2008. Year-to-date, total annuity sales totaled $108.4 billion.


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