For the second consecutive quarter, variable annuity sales improved 16% compared to the prior year, totaling $40.2 billion in the third quarter, according to a new report.
LIMRA, Windsor, Conn., published this finding in its U.S. Individual Annuities Sales survey. The report represents data from 94% of the market.
The report finds that VA sales experienced six consecutive quarters of positive growth—the last three in double digits. In the third quarter, VA guaranteed living benefit (GLB) riders were elected 88% of the time, when a GLB was available at purchase. In the first nine months of 2011, VA sales jumped 18%, to reach $120.9 billion.
Total annuity sales hit $60.4 billion in the third quarter, an increase of 8% compared to prior year. Year-to-date, annuity sales reached $182.8 billion, improving 11% from the first nine months of 2010.
Fixed annuity sales continued to struggle in the current low interest rate environment, falling 6% in the third quarter and down 1% for the first nine months of 2011. Total fixed annuity sales equaled $20.2 billion in the third quarter and $61.9 billion in the first nine months of 2011.
The report adds that indexed annuity sales in the third quarter matched the record level of $8.7 billion set in the third quarter of 2010, a 7% increase from the second quarter of 2011.
In addition, indexed annuities captured 43% of the fixed annuity market, exceeding the more traditional fixed-rate annuity sales (book-value and market-value adjusted), which had 40% market share. LIMRA expects that indexed annuities will have a record year in 2011.
Immediate annuity sales matched the record sales of $2.2 billion set in the second quarter and were up 10% compared to prior year.
Book-value sales dropped seven percent in the third quarter, to reach $6.9 billion, the report says. This was a 19% decline from second quarter sales. For the first nine months of 2011, book-value sales rose two percent to $24.1 billion.
Market-Value Adjusted (MVA) sales plummeted 33% in the third quarter, to $1.2 billion. Year to date, MVA sales have dropped 15 percent.
See LIMRA’s third quarter Annuities Industry Estimates chart here.