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September 09, 2013 at 08:16 AM
New research projects an average increase this year in the market capacity for variable annuities of $18.7 billion.
Cerulli Associates discloses this estimate in a report, “Annuities and Insurance 2013: Balancing Shrinking Supply and Increasing Demand for Guarantees.” The study pegs the average projected capacity of VAs with living benefits of $142.7 billion in 2013. This compares with new sales of VAs with optional living benefit guarantees — among them the guaranteed minimum income, withdrawal and accumulation benefits — of $124 billion in 2012.
The high and low estimates of Cerulli’s VA projected capacity this year are $153.1 billion and $132.4 billion, respectively. The estimates are based on data from Morningstar’s Annuity Research Center.
“[C]ompared to previous sales volumes, Cerulli remains confident that the VA industry can meet present-day consumer demand,” the report states. “However, much like Cerulli’s 2012 assessment, we believe there is negligible room for growth.
