Sales of fixed
annuities by US banks in the first quarter of 2011 surged 16%
compared with the first quarter of 2010 to $4.93bn, according to
data from fixed annuity research firm Beacon Research.
Beacon Research president and
CEO Jeremy Alexander commented: “Though low by historical
standards, fixed annuity rates were higher than in fourth quarter
2010. Decisions by many carriers and banks to increase fixed
annuity sales undoubtedly played a role as well. In addition, risk
aversion has increased, and that tends to favour sales of fixed
annuities over variable annuities.”
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According to the Beacon
Research, the primary driver of the increase in sales in the first
quarter of 2011 was a surge in demand for fixed rate annuities that
did not have market-value adjustments (MVA). MVAs increase or
decrease the value of annuity withdrawals, depending on whether
interest rates have fallen or risen since the annuity was
purchased.
Beacon Research noted that 69% of the bank fixed annuity
channel carriers that it monitors reported improved
quarter-to-quarter sales. The research firm added that in terms of
sale of fixed annuities, Western National Life maintained its
position as the leading bank channel company in the first quarter
of 2011.
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