Updated March 3, 2011
WINDSOR, Conn., Feb. 16, 2011 — Variable annuities (VA) sales grew 10 percent in 2010 to reach $140.5 billion, according to LIMRA’s U.S. Individual Annuities Fourth Quarter 2010 Sales Report, which represents 96 percent of the market.
“We attribute the growth to increased confidence in the VA market by consumers, advisors and the companies themselves” said Joseph Montminy, assistant vice president for LIMRA's annuity research. “We saw growth in almost two-thirds of the VA industry in 2010. Strong growth in the equities market and continued interest in guarantee income riders drove fourth quarter VA sales to its highest level in more than two years.”
In the fourth quarter, VA sales improved 17 percent compared to the same period in 2009, totaling $38.5 billion. This reflects an 11 percent increase from the sales results of the third quarter of 2010.
Total individual annuity sales rose six percent during the fourth quarter of 2010 as compared to the same period last year to reach $57.6 billion. This was a three percent improvement from the third quarter of 2010. For the year, total annuity sales dropped seven percent from 2009, primarily based on the performance of fixed annuity sales.
Indexed annuities had record sales for a second consecutive year, up seven percent in 2010, when compared to 2009 results, to reach $32.1 billion. In the fourth quarter of 2010, indexed annuity sales improved 17 percent as compared to fourth quarter of 2009, totaling $8.2 billion. Market share for indexed annuities reached 43 percent of fixed annuity sales in the fourth quarter of 2010, which is the first time index annuities outperformed fixed-rate deferred annuities products (40 percent).
Total fixed annuity sales deteriorated nine percent in the fourth quarter of 2010, when compared to fourth quarter 2009, to reach $19.1 billion. This was 10 percent lower than sales from the third quarter of 2010. After a record-breaking performance in 2009, total fixed sales in 2010 were down 27 percent to $80.8 billion. LIMRA experts indicate low interest rate spreads will continue to deter fixed annuity sales. It is unexpected to change until the current economic environment improves.
Book value annuity sales dropped 33 percent in the fourth quarter of 2010 as compared to the fourth quarter of 2009, totaling $6.4 billion. This was 11 percent lower than sales from the prior quarter. Total book value sales were 45 percent lower in 2010 than in 2009, reaching $29.3 billion.
Fourth quarter MVA sales of $1.3 billion slipped 13 percent from the fourth quarter of 2009 and measured 28 percent below third quarter 2010 levels. Fixed immediate annuity sales were flat in the fourth quarter of 2010 as compared to the fourth quarter of 2009, totaling $1.8 billion, a 10 percent decline from the third quarter of 2010. Overall, fixed immediate annuity sales grew one percent higher in 2010 than sales in 2009.
The fourth quarter Annuities Industry Estimates Chart can be found in the updated Fact Tank. To view variable, fixed and total annuity sales over the past 10 years, please visit Annuity Sales 2001-2010.
A list of the top 20 writers of overall total annuities, variable annuities and fixed annuities ranked by 2010 sales results is also available 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.