First-quarter annuity sales reached $53.1 billion, down 2.5% from the previous quarter because of decreases in variable annuity and fixed annuity sales, a new report indicates.
Cathy Weatherford
However, the dampening of sales should not cause worry, according to an industry expert.
“We believe the long-term horizon for the industry looks strong,” said Cathy Weatherford, Insured Retirement Institute’s (IRI) president and CEO, in a statement. “The markets will always experience its ebbs and flows, but at the same time, we are seeing strength within the fixed annuity market as consumers are turning to income annuities as a source of lifetime income to attain financial security during retirement. The historic level of variable annuity net assets shows that insured retirement strategies are, more and more, becoming the savings vehicle of choice for many consumers.”
Variable annuity net assets reached an all-time high of $1.61 trillion in the first quarter this year, although variable annuity total sales were down 2.7%, to $36.2 billion, from the previous quarter.
Yet the $1.61 trillion total is a 7.2% increase from total net assets last quarter, the IRI found. Still, quarterly net variable annuity sales decreased 34.5% year-over-year to $3.8 billion in the first quarter this year, compared to $5.8 billion during the same period last year. There were $24.3 billion in qualified sales and $11.8 billion in non-qualified sales in the first quarter, the IRI reported.
Fixed annuity sales for the first quarter dipped 2.2%, to $16.9 billion, from last quarter, according to the IRI. There were about $7.3 billion in qualified sales and $9.6 billion in non-qualified sales during the first quarter.
Despite overall decreases in the fixed annuity market, the income annuity segment continues to experience higher growth, the IRI reported. First quarter sales rose nearly 23% compared with last year’s first quarter.
Indexed annuity first quarter sales also were higher, with sales up nearly 9% compared with the first quarter in 2011.
Market-value adjusted annuity sales increased 1.6% to nearly $1.37 billion from last quarter’s sales of $1.34 billion.
Annuities ‘savings vehicle of choice’ despite first-quarter sales drop via IFAwebnews.com .
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