Individual Fixed Annuities Experience Resurgence As Variable Annuities Continue to Fall

WINDSOR, Conn., Dec. 1, 2008 – Despite the decline of variable annuity (VA) sales, overall sales of individual annuities continue at a record setting pace in 2008, reaching $197.1 billion through the first three quarters, according to LIMRA’s U.S. Individual Annuities Third Quarter 2008 Sales Report.

“The downward trend in the equities market has made a difficult environment for VA sales in 2008,” said Joe Montminy, research director for LIMRA's annuity research. “While VA sales were virtually flat in the first quarter, second quarter VA sales decreased 12 percent and sales dropped 18 percent in the third quarter when compared to the same quarter from last year.”

For the first nine months of 2008, VA sales reached $122.0 billion, a decrease of 10 percent. LIMRA estimates that just over 80 percent of new VA premium went into contracts in which a guaranteed living benefit rider was elected, if available. “The availability of riders that offer guarantees that can protect either a consumers principal or provide guaranteed income appears to have softened the decline in VA sales since the decrease in VA sales was about half of the decline experienced in the equities market,” added Montminy.

Fixed annuity sales were up dramatically, 41 percent year-to-date as sales reached $75.1 billion. Book value sales were up 78 percent, market value adjusted (MVA) sales increased 80 percent, and indexed annuity sales improved three percent in 2008. Fixed annuity sales increased 46 percent to $28.5 billion in the third quarter of 2008 compared to the third quarter of 2007. Book value and MVA sales increased substantially, up 85 and 70 percent respectively while fixed indexed annuity sales grew five percent. Fixed immediate annuity sales were up 26 percent year-to-date, reaching $5.9 billion.

Deferred annuity assets fell 5.2 percent during the third quarter to $1.85 trillion. It was the worst single quarter performance since LIMRA began tracking net flows on a quarterly basis in the beginning of 2007. For each product type, inflows exceeded outflows in the third quarter and year-to-date investment earnings for VA are down $214.7 billion. To view the net flow results, Industry Deferred Annuity Net Flows Estimates Third Quarter, 2008.

A list of the top 20 writers of overall total annuities, variable annuities and fixed annuities ranked by third quarter 2008 sales results, as well as the third quarter Annuities Industry Estimates Chart can be found in the updated Fact Tank.

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