Led by New York Life Products, Fixed Annuity Sales Rise 54% in Third Quarter
November 30, 2008
Buttressed by favorable interest rates and sought by investors looking for shelter from falling equity prices, U.S. fixed annuity sales set a new quarterly record.
Total U.S. sales of fixed annuities rose to an estimated $27.1 billion for the third quarter, according to a Beacon Research study of 51 insurance companies representing 87% of the market. Sales were up 54% from last year’s third quarter, and up 10% from the previous quarter, marking the highest sales since the study began in 2003.
Total fixed annuity sales for the first three-quarters of 2008 were an estimated $70.6 billion, up 50% over 2007’s three-quarter total. About $13.5 billion of the sales were in book value products, $6.9 billion in indexed, $4.2 billion in market value adjusted (MVA) and $2.4 billion in fixed immediate annuities.
New York Life sold the most fixed annuities for the second consecutive quarter with $2.5 billion, followed by AVIVA USA ($2 billion), AEGON/Transamerica Companies ($1.8 billion), AIG Annuity Insurance Co. ($1.7 billion) and Allianz Life ($1.4 billion). AIG had been the first quarter leader, with sales of about $2.7 billion.
“Year to date, we’ve seen double-digit fixed annuity sales growth in all distribution channels and for all product types except indexed annuities,” said Jeremy Alexander, CEO of Beacon Research. “Third-quarter conditions continued to be favorable. The interest rate environment gave fixed rate annuities a competitive advantage over conservative alternatives including bank certificates of deposit (CDs) and Treasuries.
“The troubled equity markets prompted a pronounced flight to safety,” he added. “Fourth quarter’s economy suggests that fixed annuity sales should be even stronger, provided that risk-averse consumers continue to feel safe entrusting their money to the life insurance industry despite the well-publicized problems of some companies.”
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