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Despite a difficult interest rate environment, income annuity sales grew almost 18% in the fourth quarter and nearly 7% in 2011, according to a new report.

Beacon Research, Evanston, Ill., published this finding in a new edition of its Fixed Annuity Premium Study. The quarterly survey tracks and analyzes product-level fixed annuity sales on an ongoing basis.

Beacon reports that the growth rates gave income annuities a record-high 13% of fourth quarter’s sales.  Indexed annuity results claimed a 48% share of the quarter’s sales—also a record high.

“Income annuities did remarkably well, considering that lower interest rates and a flatter yield curve reduced payouts,” says Beacon Research CEO Jeremy Alexander.  “Similarly, guaranteed lifetime income benefits helped sustain indexed annuity sales despite lower cap or participation rates.”

Total annual fixed annuity sales were resilient during the difficult conditions of 2011, falling just 1.1% to $75.6 billion, the survey says. Income annuity results advanced 6.6% to $8.5 billion.

Indexed annuities did about the same at approximately $33 billion. Fixed rate, non-MVA annuity sales of $28.1 billion and MVA sales of about $6 billion were down 3.1% and 5.5%, respectively.

Fourth quarter’s fixed annuity sales also held up surprisingly well on a period-to-period basis, declining only 1.7% to $17.3 billion, the survey says.  At $2.2 billion, income annuities were up 17.6%.

Indexed annuity and fixed rate MVA results were essentially flat at $8.4 billion and $1.3 billion, respectively.  Fixed rate non-MVA sales decreased 10.3% to $5.4 billion.

Overall sales fell 8.8% from third quarter, with weaker results for all product types, the survey reports.

 

Estimated Sales by Product Type (in $ millions)

 

Total

Fixed Rate

Non-MVA

Fixed Rate

MVA

Indexed

Income

2011

75,570

28,117

5,996

32,978

8,481

2010

76,400

29,017

6,348

33,080

7,958

% change

-1.1%

-3.1%

-5.5%

-0.3%

6.6%

Q4 ‘11

17,330

5,409

1,346

8,352

2,221

Q4 ‘10

17,620

6,026

1,358

8,351

1,889

% change

-1.7%

-10.3%

-0.9%

0.0%

17.6%

Q4 ‘11

17,330

5,409

1,346

8,352

2,221

Q3 ‘11

19,000

6,627

1,460

8,690

2,226

% change

-8.8%

-18.4%

-7.8%

-3.9%

-0.2%