Annuities sales fell 7% overall in the second quarter, dragged down by poor fixed annuity sales, although variable annuity sales rose 11% over the same period, according to new data from LIMRA.

Bank reps' combined sales of fixed and variable annuities fell by 27% year-over-year. Their VA sales were actually up by 21%, but a drop in demand for fixed annuities, which were hurt by weak interest rates, meant that FA sales fell by 46% at banks, more than in any other channel.

Banks and independent insurance agents sell the bulk of fixed annuities. In the second quarter, banks sold $4.8 billion and independent insurance agents sold $8.6 billion of the total $21.5 billion in fixed annuity sales. By comparison, wirehouses sold $1 billion in fixed annuities and independent financial advisors sold $1.5 billion. "Banks have always been strong in book-value type products, while independents sell more indexed annuities, which are experiencing record sales," explains Joe Montminy, head of individual annuity research at LIMRA.

Indexed annuities, which typically sell to fixed annuity clients wanting a little exposure to market upside but are too risk-averse for variable annuities, sell well in a specific market. Right now, with interest rates so low, indexed annuities are an attractive alternative to fixed annuities.

However, Montminy says, while independent insurance agents represent 85% of all sales of indexed annuities, the products themselves only account for a small percentage of the entire annuity universe, around 5% to 7%.

Independent advisors sold the most VAs in the second quarter ($10.3 billion), followed by career insurance agents ($8.4 billion), wirehouse brokers ($6.3 billion) and then bank reps ($4.1 billion).

"Independents have really picked up market share in the past year or two," Montminy says, adding that this is partly due to rocky market conditions sending investors scurrying for guarantees and also because turmoil in the wirehouse channel has boosted salesperson headcount at the independents.

VA election level, the percentage of clients for whom the product was recommended and who eventually bought one, stayed steady at about 87%. Second-quarter VA sales reached $35.5 billion, 11% higher than a year ago and a high watermark for the past few years, which Montminy says is partly due to the retirement income conversation becoming more prevalent both on Main Street and on Capitol Hill.

VA sales were strong across the board, with 17 of the top 20 sellers posting gains. The top five sellers across all channels are Prudential ($11 billion in sales), Met Life ($9.8 billion), Jackson National ($8.4 billion), TIAA-CREF ($7 billion) and AIG ($6.5 billion).