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Annuity inflows dropped in June

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In June, annuity inflows decreased by 9.7 percent to $7.2 billion from $7.9 billion in May, reports the Depository Trust & Clearing Corp.’s (DTCC) Insurance & Retirement Services (I&RS) first-half account of annuity activity.

Looking over the first six months of this year, inflows totaled nearly $45 billion, an uptick of 4 percent, or $1.7 billion, compared to the first half of 2012. Outflows (annuity contract terminations) came in at $41 billion, rising by more than 13 percent, or $4.8 billion, from the same time last year. Consequently, net cash flows declined more than 46 percent to a total of $3.6 billion in the first half of this year when measured against the first six months of 2012.

When compared to the second half of 2012, inflows climbed upward by 6 percent; outflows increased by 9 percent and net flows fell by just under 20 percent.

The DTCC report points out that although inflows dropped between May and June, inflows actually increased by 3.4 percent when compared to June 2012. Also of note in the latest compilation is that outflows for June decreased by 11.7 percent versus May, falling from $7.3 billion in May to $6.4 billion in June. Accordingly, net flows rose by 12 percent to $780 million from $697 million.

Culling data from 112 insurance companies (representing 43 parent/holding companies), 128 distributors and 3,236 annuity products, DTCC’s National Securities Clearing Corp. subsidiary tallied more than $85 billion in annuity product transactions in the first half of this year.

The top 10 companies accounted for more than $15 billion in positive net flows, with Prudential PLC, Lincoln National Corp., Prudential Financial Inc., American International Group Inc. and Aegon NV taking the top five spots, followed by Nationwide Financial Services Inc., Pacific Life, MetLife, Ameriprise Financial Inc. and AXA SA rounding out the top 10.

The report further breaks out data by account origin, with several key trends coming to the fore in June:

  • IRA accounts attracted 44.9 percent of all inflows in June, while nonqualified accounts attracted 44.4 percent of inflows.
  • 401(k) accounts drew in 5 percent of the inflows; other qualified accounts made up 5.7 percent.
  • Nonqualified accounts charted negative net cash flows of more than $143 million in June compared to IRA accounts, which experienced positive net cash flows of more than $817 million for the month.

The report also discloses the top 10 states ranked by inflows and which accounted for nearly half of all inflows. Leading states include California, Florida, New York, Texas, Pennsylvania, Ohio, New Jersey, Michigan, Illinois and Massachusetts.

I&RS obtains the data from roughly 450 distribution and carrier firms that represent life insurance, fixed and variable annuities, as well as other distribution channels that include banks, brokerage general agencies, insurance marketing organizations and insurance broker-dealers.

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