Fixed Annuity Sales Reach a Six-Year High—Beacon Research
August 26, 2008
With an estimated $24.6 billion in premiums, U.S. sales of fixed annuities soared to their highest levels since 2003 in the second quarter of 2008, according to a Beacon Research Fixed Annuity Premium Study based on sales of more than 400 products by 50 insurance companies representing almost 90% of the market.
Overall quarterly sales were 54.1% higher than the second quarter of 2007 and up 29.7% from the first quarter of 2008. For the first six months of 2008, sales were an estimated $43.5 billion, 47.3% higher than the first half of 2007.
“The yield curve flattened but remained positive, giving fixed annuities a rate advantage over other conservative interest-bearing alternatives,” said Jeremy Alexander, CEO of Beacon Research.
“Rates rose over the quarter, and fixed annuity credited rates at or above the important 5% threshold were available,” he added. “We anticipate more growth in third quarter, but increases are likely to be more modest.”
Year-over-year, sales of book value contracts more than doubled, to $12 billion. Indexed annuity sales rose 4.5%, to $6.9 billion, while market-value adjusted (MVA) contract sales rose 89.2%, to $3.6 billion, and sales of immediate annuities rose 29.5%, to $2.1 billion. Compared to the first quarter of 2008, MVA contracts were up 54.4%, book value were up 32.5%, indexed were up 20.1%, and immediate were up 15.3% in the second quarter.
New York Life claimed overall sales leadership among study participants, with $2.20 billion, and the firm’s Enhanced and Preferred book value fixed annuities were the two best sellers overall. The firm was also the quarter’s immediate annuity sales leader. Rounding out the top five sellers overall were AIG Annuity ($2.09 billion), AVIVA USA ($1.67 billion), AEGON/Transamerica ($1.31 billion) and Allianz Life ($1.31 billion).
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