After having released the first quarter sales numbers for indexed annuities, the press began acting like Chicken Little. “The sky is falling! The sky is falling! Indexed annuity sales are falling, too!”

I tend to take the more cool, calm and collected approach to these matters due to my background in market research. The sky isn’t falling. Indexed annuity sales are down, yes, but they are not out.

The 44 companies that were selling indexed annuities in the first quarter sold an aggregate of $7.8 billion in sales of these retirement savings products. That is a really huge number. In fact, it is enough for everyone in the world to own a $1.10 indexed annuity. (That paycheck for life would be a pretty small amount, but you get the idea.)

However, sales are down when compared to both the previous quarter and the previous year. First, let’s take a look at the most recent numbers against the previous quarter’s sales (and get inside the mind of a market research analyst).

Apples to oranges

Fourth-quarter indexed annuity sales are almost always phenomenal. This is because annuity salespeople are scrambling, submitting as much business as they possibly can, in order to qualify for trips, incentives and bonuses. So, a comparison of first quarter to the previous quarter’s sales is never a fair one; in fact, it is an apples-to-oranges evaluation. As a result, this quarter’s 8.21 percent drop in sales is something an analyst like me would disregard.

Compounding the matter of this sales decline is the fact that the fourth quarter of 2012 had the greatest sales of indexed annuities of any other fourth quarter since the products’ creation. Not a simple feat. Simplistically, we’re comparing first quarter sales to a fourth-quarter record. Seems like a pretty big benchmark. I always say it is easy to fall when expectations are set so high. For this reason, I didn’t find the big sales drop to be significant.

Now, comparing indexed annuity sales in the first quarter to the same period in 2012 is a much more accurate comparison. Sales were down 2.79 percent when contrasting to the first quarter of last year. And sure, that’s down. But let’s take a deeper look. Sales of indexed annuities in the first quarter of 2012 were the greatest of any first quarter sales since these products hit the streets. So again, it seems disingenuous to compare this quarter’s sales to a first-quarter record.

Look folks, if you haven’t gotten the memo, we are facing industry-wide, historical-low interest rates. That is going to affect sales sooner or later, whether comparing to record sales or not. As a result of these miserable rates, a couple of big insurance companies had to make some tough decisions to make their indexed annuity products less attractive in the third quarter of 2012. That didn’t immediately have an impact on sales because of the “big fourth quarter push.” However, it took hold in the first quarter of this year, and sales suffered a little as a result. No biggie.

Does this mean the sky is falling? Absolutely not. This product is still very much in favor. If anything, I’d say that indexed annuities have proven to be a resilient product with high consumer demand. Just give this industry another quarter or two, and we’ll be on top again. In fact, I’m projecting record sales in 2013, and that indexed annuity sales will top fixed annuity sales in 2014. Let’s see if it comes to fruition.

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