Low interest rate caps have been hurting indexed annuity sales, according to Jack Marrion.
LIMRA, Windsor, Conn., and AnnuitySpecs.com, Pleasant Hill, Iowa, reported Wednesday that U.S. individual indexed annuity sales amounted to $7.1 billion in the first quarter.
LIMRA said sales were up 1% from the first quarter of 2010; AnnuitySpecs.com estimated sales were up 5%.
Marrion, president of Advantage Compendium Ltd., St. Louis, another company that tracks the indexed annuity market, says in a commentary that the rate of increase is disappointing, because the first quarter of 2010 was a weak quarter for indexed annuity sales.
The current interest caps on typical indexed annuities is 3% or 4%, Marrion says.
“I have talked with many agents this spring that have told me that their sales are down, and they believe the reason is because it’s hard to get someone to buy an annuity when the interest cap is 3% or 4%,” Marrion says.
Agents in banks are an exception, because, in banks, the competition comes from certificates of deposit paying a rate of just 1%, Marrion says.
Meanwhile, the stock market continues to rise, and many broker-dealers who had been focusing on selling indexed annuities are now selling more variable annuities, Marrion says.
- Allison Bell