Rising sales of variable annuities could make 2011 a better year for annuity sales in banks, according to Kehrer-LIMRA.

Sales of annuities in banks fell to $2.7 billion in December 2010, down from $2.9 billion in December 2009, according to Kehrer-LIMRA, a unit of LIMRA, Windsor, Conn.

Sales of fixed annuities fell to $1.1 billion, from $1.6 billion, but sales of variable annuities increased to $1.6 billion, from $1.3 billion.

This year, variable annuities seem to be poised for sales growth, Kehrer-LIMRA says.

With the recession waning and the Dow Jones Industrial Average rising, variable annuities seem likely to benefit from the bull market, the research unit says.

Sales of variable annuities often move in opposite directions from sales of fixed annuities, as consumers seek safety or look for higher returns, but, in the coming year, sales of fixed annuities may rise along with sales of variable annuities as interest rates recover, Kehrer-LIMRA says.

In the past year, the rate spread between the yield on 5-year certificates of deposit (CDs) and the average effective yield offered by fixed annuities reached a low of negative 0.16% below CD rates in June 2010.

By January 2011, the average effective yield on 5-year products had increased to 0.39% above 5-year CD rates, Kehrer-LIMRA says.