Annuities sales fell 7% in the second quarter from a year ago, dragged down by fixed annuities even as variable annuities rose 11%, according to new data from Limra.

Among key channels, independent financial advisers sold $11.8 billion in annuities, covering both fixed and variable, down 5% year over year.

Wirehouse advisers sold $7.3 billion worth, up 5% over the same period; and bank reps sold $8.9 billion in annuities, down 27%.

The bank channel relies a lot more heavily on fixed annuity sales; such sales fell 46% there.

Across all channels, fixed annuity sales declined 26% in the second quarter, but Joe Montminy, who heads Limra’s individual annuity research, notes the products were selling in record numbers at the beginning of 2009.

While this year’s fixed annuity sales can’t match that, total second quarter sales were stronger than the first by 13%, and will likely hover around the $19 billion to $22 billion sales mark per quarter for the rest of the year.

Banks and independent insurance agents sell the bulk of fixed annuities still.

In the second quarter, banks sold $4.8 billion and independent insurance agents sold $8.6 billion of the total $21.5 billion fixed annuity sales.

By comparison, wirehouses sold $1 billion in fixed annuities and independent financial advisers 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,” Montminy says.

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 financial advisers sold the most variable annuities ($10.3 billion), followed by career insurance agents ($8.4 billion), wirehouses ($6.3 billion) and then banks ($4.1 billion).

“Independents have really picked up market share in the past year or two,” Montminy says.

He adds 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 recommended the product who eventually bought one, remained steady at around 87%.

Second quarter variable annuity sales reached $35.5 billion, a high watermark for the past couple of years.

Montminy says that is partly due to the retirement-income conversation becoming more prevalent both on Main Street and on Capitol Hill.

For the first half of 2010, variable annuity sales were strong across the board, with 17 of the top 20 sellers of annuities posting gains.

The top 5 sellers across all channels are Prudential ($11 billion in sales), Metlife ($9.8 billion), Jackson National ($8.4 billion), TIAA-CREF ($7 billion) and AIG ($6.5 billion).