WINDSOR, Conn., March 8, 2011 — Assets of variable annuities (VA) with guaranteed living benefit (GLB) riders rose 78 percent from $292 billion in the fourth quarter of 2008 to $521 billion in the fourth quarter of 2010, according to LIMRA’s study, which represents 95 percent of the variable annuity GLB industry.
“GLBs are increasingly integral to the VA industry. Assets for VA with GLB riders have grown from 25 percent to 33 percent of total VA assets in just two years,” remarked Dan Beatrice, senior analyst, LIMRA Retirement Research. “The lion’s share of new VA sales has been for contracts with GLB riders. In addition, persistency for these contracts is better than those without the GLB riders, resulting in more than double the 36 percent growth rate of total VA assets.”
Fourth quarter VA sales with GLB elected generated $23.1 billion, 79 percent of new VA sales. For the year, VA sales with GLBs elected totaled $81.1 billion, eight percent higher than during the 2009.
The election rate of GLB riders slipped to 87 percent in the fourth quarter. In 2010, the GLB election rate was strong at 88 percent. The guaranteed lifetime withdrawal benefit (GLWB) election rate remained constant at 65 percent throughout the second half of 2010.
Guaranteed minimum income benefit (GMIB) riders dropped two percentage points from the third quarter to reach 16 percent in the fourth quarter of 2010. Guaranteed minimum accumulation benefit (GMAB) election rate stayed at four percent; and guaranteed minimum withdrawal benefit (GMWB) was two percent in the fourth quarter of 2010.
The rate at which any GLB was elected declined three percentage points in the career distribution to reach 76 percent. Rates of bank and wire house channels dipped one (90 percent) and two percent (89 percent) respectively, while the independent channel rate of election was steady at 91 percent.
LIMRA’s Variable Annuity Guaranteed Living Benefit Election Tracking Survey collects VA GLB sales, election rates and assets on a quarterly basis.
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.