Combined assets of U.S. variable annuities were slightly more than $1 trillion, a 5.4% drop compared with the fourth quarter of 2008, according to data released today from NAVA, the Association for Insured Retirement Solutions. The drop compares with an 11% decline in the Standard & Poor’s 500 during the same period.

Volatile bond and equity market conditions caused variable annuity holdings to drop, said a NAVA spokesman. Still, he remained optimistic, despite the drop in sales. “I think it shows a lot of value,” he said. “The nice thing is that we are less affected than others.” Total sales of the insurance products were $30.45 billion, down from $33.3 billion the previous quarter. It was the second consecutive quarter of declines in premium and net sales combined. After the third quarter of 2008, sales were $37.8 billion. They dropped to $33.3 billion in the fourth quarter, and again for the first quarter, according to data that the organization gleaned from Chicago-based Morningstar, an independent research firm. A NAVA spokesman acknowledged the sales slump, but said it left more room for the industry to persuade skeptical financial planners to endorse the products for their clients.

Net sales, however, increased. In the first quarter, they were $5.1 billion, up from $4.2 billion the previous quarter. “The data is slightly better than we expected. We have been seeing optimism in our economy recently,” according to a statement from Cathy Weatherford, president and chief executive officer of NAVA, a non-profit trade association.