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Annuity sales through banks topped $35 billion in 2013

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Good and bad news hit annuity sales through financial institutions in 2013, according to figures released in the annual BISRA Report.

Fixed annuities led the way, growing 39 percent from the previous year, but premiums continue to swoon, falling 36 percent since the record high in 2008.

“We saw a nice progression as the year unfolded and in the year-end tally we’re seeing meaningful growth in fixed annuities for the first time in five years,” said Janet Cappelletti, Head of Research at BISRA.

“Monthly sales of fixed products were up in nine out of twelve months while variable annuity sales peaked in April,” said Cappelletti. “The tides turned in July when fixed annuities outsold variables for the first time since April 2011.”

In all, total annuity sales topped $35 billion last year at financial institutions.

By the numbers

* Fixed sales production at financial institutions swelled to $16.6 billion in 2013

* This elevated the bank channel to the second largest distribution channel in the industry for fixed annuities behind the independent agent channel.

* AIG more than doubled production and maintained its status as the number one fixed annuity provider at banks for the eighteenth consecutive year.

* The top five carriers nearly doubled their performance and generated more than two-thirds of bank fixed premium.

* Fixed annuities outsold variables for the first time since April 2011.”

* The shift that began in July coincided with a significant rise in fixed annuity rate offerings while bank CD rates remained stagnant.

* The spread between average interest rates on five-year guarantee fixed annuity product versus five-year CD rates grew from 42 basis points in June to 77 basis points in July – the largest margin since July of 2009.

According to Dan Beatrice, Associate Research Director at BISRA, “The increase in traditional fixed-rate product sales combined with a meteoric rise in indexed annuity production to drive the overall annuity sales increase. Indexed annuity sales jumped 78 percent to an all time high of $5.1 billion in 2013, accounting for one third of bank sold fixed deferred annuities.”

Income annuities also reached record volume in 2013, increasing 4 percent to $1.3 billion.

Variable sales fizzle after strong start

Variable annuity sales rose to a two-year quarterly high in Q2 2013, only to fall to a three-year low in the fourth quarter. By year-end, annual VA production at banks had improved 3 percent over 2012 levels, reaching $18.2 billion.

The BISRA Quarterly Annuity Sales Survey is based on a national sample of carriers that represent 98 percent of annuity premium sold in the bank channel.


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