Annuity sales in 2011 grew 7.7%, fueled in large part by a 28% increase in net variable-annuity sales during the year.
Cathy Weatherford
The increase in variable-annuity sales, to $27.7 billion was the best since 2007, according to the Insured Retirement Institute (IRI), whose analysis was based on data reported by Morningstar and Beacon Research.
Fourth-quarter variable annuity sales also were strong, increasing nearly 35% from the $5.4 billion in sales in the fourth quarter of 2010.
Net variable-annuity sales for the quarter increased by nearly 35%, to $7.2 billion, in the fourth quarter. While quarter-to-quarter net variable-annuity sales declined, the fourth quarter was the second strongest quarter since mid-2008.
Industry-wide fourth quarter annuity sales topped $54.5 billion. Although sales were 6.6% lower than from $58.1 billion during the third quarter, industry-wide yearly sales were $231.1 billion in 2011, compared with $214.6 billion in 2010.
“These sales results demonstrate that the marketplace for insured retirement products is truly robust with a significant number of investors looking to attain lifetime income as part of their retirement strategy,” said IRI President and CEO Cathy Weatherford.
Fixed-annuity sales for 2011 totaled $75.6 billion, down 1.1% from 2010, according to Beacon Research. Fixed annuity sales for the fourth quarter dipped 8.8%, to $17.3 billion, compared to the third quarter, but were relatively flat compared with 2010 fourth-quarter sales of $17.6 billion. There were $8.3 billion in qualified sales and $9 billion in non-qualified sales in the fourth quarter.
“Considering the interest rate decline, fixed annuity sales have proven quite resilient due to the need for guaranteed retirement income,” said Beacon Research President Jeremy Alexander.
Alexander called the strong income annuity growth “especially noteworthy,” saying, “These products are finally getting the attention they deserve for their ability to provide personal pensions. Guaranteed lifetime income benefits have sustained indexed-annuity sales, despite lower caps and participation rates.”
According to Morningstar, variable annuities also had their strongest overall year since 2007 in total sales, which increased more than 12%, to $155.5 billion.
Variable-annuity sales for the fourth quarter were $37.2 billion, down 55 from $39.1 billion in the previous quarter. Variable-annuity net assets totaled $1.5 trillion during the fourth quarter, a 5.6% increase from the third quarter.
A total of $25.6 billion in qualified sales and $11.6 billion in non-qualified sales were recorded in the fourth quarter.
“While gross sales show signs of leveling off, the sustained improvement in net cash flow indicates that variable annuities are increasingly attracting new money versus generating sales through exchanges of existing contracts,” said Morningstar Director of Insurance Solutions Frank O’Connor.
Annuity sales ‘robust,’ sparked by 28% rise in variable annuity sales via IFAwebnews.com .
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