WINDSOR, Conn., Aug. 21, 2009 – Total quarterly individual annuity sales dropped to $60.5 billion in the second quarter, down nine percent from the first quarter of 2009 and 11 percent below the second quarter of 2008, according to LIMRA's U.S. Individual Annuities quarterly sales survey.
In the first six months of the year, total individual annuity sales fell three percent over 2008, totaling $126.8 billion. Year-to-date, fixed annuity sales rose 39 percent to $64.2 billion while variable annuity (VA) sales fell 26 percent to $62.6 billion, as compared to the first six months of 2008.
"Second quarter fixed sales fell quarter-over-quarter due to a decline in fixed annuity interest rates and their corresponding spreads in addition to annuity companies pulling back on issuing new business due to capital constraints," said Joe Montminy, research director for LIMRA's annuity research. "Meanwhile, VA sales improved quarter-over-quarter as VA sales have a tendency to follow the stock market plus there was a strong demand for the guarantees offered on many VA riders."
VA sales reached $31.9 billion in the second quarter and experienced a shift when compared to first quarter results, increasing four percent. This was the first improvement in quarter-over-prior quarter VA sales since the second quarter of 2008. However, VA sales declined 24 percent when compared to the second quarter of 2008.
Second quarter fixed annuities sales hit $28.6 billion, down 20 percent from the first quarter of 2009 but 11 percent higher than the second quarter of 2008. Fixed annuity sales have not declined on a quarter-over-quarter basis since the first quarter of 2007. Sales of book value products fell 25 percent from last quarter but improved 17 percent from one year ago, recording a 53 percent growth year-to-date. MVA annuity sales were cut in half compare to the first quarter of 2009 and were down six percent compared to the same quarter last year but still increased 76 percent in the first half of 2009.
Indexed annuities experienced 14 percent growth for the quarter, resulting in a record high of $8.1 billion in sales, which propelled year-to-date indexed annuity sales up 20 percent to $15.2 billion.
Second quarter election rates for VA Guaranteed Living Benefits (GLBs) that elected any GLB, when available, remained steady at 88 percent. Election rates for the GLWB rider, the most popular rider, rose to a record high of 59 percent despite many VA companies raising fees and decreasing benefits on their GLWB riders during the first half of 2009.
A list of the top 20 writers of overall total annuities, variable annuities and fixed annuities ranked by second quarter 2009 sales results, as well as the second quarter Annuities Industry Estimates Chart can be found in the updated Fact Tank.
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