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Life Health > Annuities

LIMRA: Indexed annuities post record sales in third quarter 2010

By Staff Writer

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Indexed annuity sales totaled $8.7 billion in the third quarter of 2010, setting a new record, according to LIMRA. The numbers were up 6% from the prior quarter and 16% over third quarter 2009.

“This is the ideal market for indexed annuity sales: lots of volatility in the equities markets coupled with low credited rates and declining interest rate spreads on traditional fixed-rate annuities. This has attracted some conservative consumers that might have purchased a traditional fixed-rate annuity,” said Joseph Montminy, assistant vice president for LIMRA’s annuity research.

Indexed annuities have now grown to represent 41% of the fixed annuity market, said Montminy.

Total individual annuity sales improved 1% during the third quarter as compared to the same period last year to reach $56.1 billion. This was a 2% decline from the second quarter of 2010. In the first nine months of 2010, total annuities hit $164.5 billion, a drop of 11%.

Sales of variable annuities (VA) slipped 2% to $34.9 billion in the third quarter as compared to prior quarter. However, this was a 9% increase from VA sales in the third quarter in 2009. Year to date, VA sales equaled $102.8 billion, improving 8% over the first nine months of 2009

Total fixed annuity sales declined 1% in the third quarter of 2010, when compared to last quarter, to reach $21.2 billion. This was 10% lower than sales from the third quarter of 2009. To this point in 2010, fixed annuity sales were down 31% to $61.7 billion after a record performance in 2009.

Book value annuity sales dropped 11% in the third quarter of 2010 as compared to the second quarter of 2010, totaling $7.2 billion. This was 32% lower than sales from the same period of 2009. Year to date, book value sales were almost half of the premium from the first nine months of 2009. Third quarter MVA sales of $1.8 billion improved 13% from the prior quarter but still measured 25% below third quarter 2009 levels. Fixed immediate annuity sales dipped slightly to $2.0 billion, a 5% decline from the second quarter of 2010 but 11% higher than the same quarter last year.

A list of the top 20 writers of overall total annuities, variable annuities and fixed annuities ranked by third quarter 2010 sales results, as well as the third quarter Annuities Industry Estimates Chart can be found in the updated Data Bank.

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