Bank Fixed Annuity Sales Rise 26% in Second Quarter
August 24, 2008
Driven by a positive yield curve, fixed annuity sales through U.S. banks, credit unions and savings and loan institutions rose markedly in the second quarter of 2008, according to Beacon Research’s Fixed Annuity Premium Study of 126 products sold by insurance companies.
Participants' second quarter sales of about $7 billion were 25.8% higher than in the previous quarter and 81.1% higher than sales in the second quarter of 2007. Sales in the first half of 2008 were $12.6 billion, up 79.9% from the first half of 2007.
“Though the spread between one- and ten-year Treasuries narrowed over the quarter, the yield curve remained positive. This gave fixed rate annuities a continued advantage over bank certificates of deposit. In addition, fixed annuity rates were higher in second quarter," said Jeremy Alexander, CEO of Beacon Research.
“Larger indexed annuity cap rates and immediate annuity payouts helped increase bank sales of these products as well. We expect growth to continue in third quarter, but at a slower rate,” he added.
Book value annuities continued to dominate with sales of $6 billion, up 86.0% from the second quarter of 2007 and 19.1% more than the previous quarter. Participants also reported double-digit growth in sales of market value-adjusted (MVA) annuities ($552 million), indexed annuities ($323 million) and immediate annuities ($156 million).
AIG Annuity led in the bank channel for the seventh straight quarter, with $1.97 billion in fixed annuity sales overall. It also had the second and fifth biggest-selling products. New York Life’s Enhanced Fixed Annuity and Preferred Fixed Annuity were the first and third best sellers in the bank channel. All of the 10 best-selling products were book value annuities except Lincoln Financial Group’s New Directions indexed annuity.
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