Annuities continue to struggle with low interest rates. According to LIMRA, overall annuity sales in the third quarter declined 10% compared with the third quarter of 2011, to $54.3 billion.
For the first nine months of 2012, annuity sales fell 8% compared with prior year, totaling $166.1 billion.
“Protracted low-interest rates have impacted all lines of the annuity business, causing manufacturers to reassess their exposure among various product lines,” Joe Montminy, assistant vice president and director of LIMRA annuity research, said in a statement. “The sustained uncertain economic environment has many companies implementing conservative risk management strategies in an effort to prudently manage their business.”
More disconcertingly, while leading variable annuity writers have announced they are making adjustments to their book of business, LIMRA believes the total impact of these decisions has not fully reached the market.
However, the value of the guarantee offered by living benefit riders appears to be getting through to consumers. When available, such riders were elected 87% of the time.