For the first time in two years fixed annuity sales rose, according to the Beacon Research Fixed Annuity Premium Study released on Thursday.
Fixed annuity sales in the first quarter of 2011 jumped 6% to $18.9 billion, with growth in all four product types.
Book value annuities shot up 12% to $8.6 billion, while market value-adjusted products (MVAs) rose 7% to $1.4 billion, indexed annuity sales inched up 0.2% to $7.1 billion, and income annuity results rose 0.8% to $1.8 billion.
On a quarter-to-quarter basis, book value sales rose 42%, while MVAs improved 7%, according to Beacon. Indexed and income annuities declined 15% and 7%, respectively. Sales increased 7% in total.
“Fixed rate annuities benefited from higher rates in the first quarter,” said Jeremy Alexander, CEO of Beacon Research, in a press release. “They had a strong rate advantage over CDs in many banks. The steep yield curve made longer term rates particularly attractive and sales moved longer as a result. Indexed annuities apparently lost sales to both fixed rate and variable annuities, while income annuities’ sequential decline was partly seasonal.”
Western National jumped up four notches, leading first quarter sales. New York Life rose one place to come in second and Allianz took third place, followed by American Equity and Aviva. American National was the new MVA sales leader. The other top companies by product type were unchanged: book value – Western National, indexed – Allianz, and income – New York Life.
Western National led in the bank channel. New York Life was the leading captive agent and large-regional broker-dealer (B-D) company. Allianz was the top independent producer carrier. Nationwide was the new wirehouse sales leader. MassMutual and USAA was strong in the independent B-D and direct/third party channels, respectively.
New York Life’s Secure Term Fixed Annuity was the new bestseller, and its Lifetime Income Annuity took fourth place. Allianz Life’s MasterDex X was second. Western National rejoined the top five with Flex 7 in fifth place. American Equity’s Bonus Gold moved up a notch to come in third.
“Looking ahead, falling interest rates are likely to dampen fixed rate annuity sales in the near-term but may help indexed annuities. Income annuity results are likely to strengthen gradually due to growing demand for lifetime income and that will support indexed products with guaranteed lifetime withdrawal benefits as well,” Alexander concluded.