WINDSOR, Conn., May 19, 2010— For the fourth consecutive quarter, total annuity sales declined when compared to the same quarter from one year ago. In the first three months of 2010, total annuity sales slipped to $51.4 billion, down fell 24 percent from the first quarter of 2009 and five percent below fourth quarter 2009, according to LIMRA's U.S. Individual Annuities quarterly sales survey.
“It’s important to remember that when variable annuity sales plummeted a year ago, fixed annuity sales experienced record growth, propelling overall individual annuity sales into positive territory,” said Joe Montminy, assistant vice president for LIMRA's annuity research. “Despite steady variable annuity sales over the last year, shrinking interest rate spreads have undermined fixed annuity sales—causing total annuity sales to hit an eight-year low this quarter.”
Variable annuities (VA) sales improved five percent in the first quarter compared to first quarter of 2009, totaling $32.4 billion. However, VA sales in the first quarter of last year were at their lowest levels since third quarter 2004. When you compare first quarter 2010 sales with the fourth quarter 2009 results, VA sales were down two percent.
Fixed annuity sales continued to decline dramatically, down 48 percent compared to the first quarter of 2009, when fixed annuity sales hit a record high. This was the third consecutive quarter of declines for fixed annuity sales when compared to sales from the prior year; and a 10 percent drop from the fourth quarter of 2009. Fixed annuity sales totaled $19.0 billion in the first quarter of 2010.
After a strong performance in 2009, indexed annuities first quarter sales fell three percent compared to first quarter of 2009 and matched sales from fourth quarter 2009, totaling $7.0 billion.
Book value sales also declined for the third consecutive quarter, when compared to the prior year. Book value sales dropped 60 percent from the first quarter of 2009 and 20 percent compared to the fourth quarter of 2009. First quarter MVA sales were down 81 percent from first quarter 2009 and 13 percent lower than last quarter.
A list of the top 20 writers of overall total annuities, variable annuities and fixed annuities ranked by first quarter 2009 sales results, as well as the first quarter Annuities Industry Estimates Chart can be found in the updated Fact Tank.
LIMRA is a worldwide research, consulting and professional development organization that helps more than 850 insurance and financial services companies in 73 countries increase their marketing and distribution effectiveness. Visit LIMRA at www.limra.com.