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Life insurer support helped keep U.S. sales of individual variable indexed annuities growing in the second quarter, even as sales of all other major types of individual annuities fell.

Analysts at the Secure Retirement Institute say, in a summary of new survey data, that overall individual annuity sales fell 24%, to $49 billion.

Sales of all types of variable annuities fell 19%, to $21 billion.

In the market for fixed annuities, including non-variable indexed annuities, sales dropped 27%, to $28 billion.

Resources

  • A copy of the latest Secure Retirement Institute survey summary is available here, and a copy of the underlying summary data is available here.
  • An article about first-quarter annuity sales figures is available here.

The Secure Retirement Institute is an arm of Windsor, Connecticut-based LL Global. Analysts use annuity issuer surveys to produce quarterly annuity sales data.

Here’s what happened to sales of some major sub-types of annuities, other than registered index-linked annuities, that are included in the survey results summary:

  • Variable indexed annuities: $4.5 billion (up 8%)
  • Fixed-rate deferred annuities: $13 billion (down 2%)
  • Variable annuities, excluding indexed variable annuities: $16 billion (down 25%)
  • Indexed annuities that are classified as non-variable products: $12 billion (down 40%)
  • Fixed immediate annuities: $3.3 billion (down 48%)
  • Deferred income annuities: $350 million (down 51%)

Issuers of individual annuities filed as non-variable products must protect the holder against any loss of account value that might otherwise result from investment market fluctuations.

An insurer that files an annuity contract with the U.S. Securities and Exchange Commission, as a variable contract, can decide whether to provide any protection against investment performance risk and, if so, how much.

Executives from some life insurers have said that they see offering variable indexed annuities as a good way to continue to offer annuities while protecting their companies against the effects of very low interest rates and ups and downs in stock prices.

Low interest rates can hurt life insurers’ ability to provide account value guarantees, because life insurers typically support benefits guarantees with investments in bonds from highly regarded companies, along with some mortgages, mortgage-backed securities and other types of assets.

Interest on high-quality 10-year corporate bonds averaged just 2.05% at the end of July, down from 3.21% a year earlier, according to the Federal Reserve Bank of St. Louis.

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