Late Fall 2009
US Individual Annuity Sales Drop in Second Quarter
by Martina Fialova, from LIMRA’s Volume 16 - Number 3 2009 issue of U.S. Marketplace
Reprinted with permission from LIMRA International
In the first half of 2009, total individual annuity sales fell 3 percent to $126.8 billion. Fixed annuity sales were up 39 percent reaching $64.2 billion, and variable annuity (VA) sales declined 25 percent to $62.6 billion for the year to date. All fixed annuity sales components, except for Structured Settlements, rose year-to-date as a result of strong growth in fixed deferred annuity sales. Sales of book value products, the largest fixed annuity product type, jumped 53 percent, and MVA product sales increased 76 percent. Indexed annuity sales improved 20 percent. Fixed immediate annuity sales remained steady at 3 percent growth.
Total annuity sales in the second quarter of 2009 were $60.5 billion, down 11 percent compared with the second quarter of 2008. This was due to a 24 percent decline in variable annuity (VA) sales while fixed annuity sales grew 11 percent. However, when compared with the first quarter of 2009, second quarter 2009 total annuity sales slipped 9 percent. Although VA sales experienced a small turnaround when compared with the first quarter of 2009, growing 4 percent, the overall decline was due to a 20 percent drop in fixed annuity sales. VA sales growth was the first improvement in quarter-over-prior-quarter sales since second quarter 2008. The quarter-over-prior-quarter drop in fixed annuity sales was the first decline since first quarter 2007. The decline in fixed annuity sales was mostly due to falling book value and MVA deferred annuity sales, yet indexed annuity quarterly sales hit a record high of $8.1 billion in second quarter 2009. Indexed annuity products can be attractive in a positive yet uncertain market, which we have experienced recently.
U.S. Individual Annuity Sales and Percent Change Second Quarter 2009 — Year-to-Date and Quarterly Data (figures in billions)
| Product Type | YTD 2009 | YTD % |
|---|---|---|
| Variable | $62.6 | -26% |
| Fixed | $64.2 | 39% |
| Fixed Deferred | $57.5 | 46% |
| Book Value | $32.1 | 53% |
| Indexed | $15.2 | 20% |
| MVA | $10.2 | 76% |
| Fixed Immediate | $3.8 | 3% |
| Structured Settlements | $2.9 | -6% |
| Total Annuity Sales | $126.8 | -3% |
For more information about the U.S. Individual Annuity Sales study, contact Martina Fialova at 860.285.7756.