Annuity sales via US banks dived in the closing months of 2009
to record sales below $3bn in November and December for the first
time since February 2007, reports bancassurance consultancy
“There have been only two times in
the last five years where we have seen bank channel total annuity
sales this low,” said Janet Cappelletti, associate research
director at Kehrer-LIMRA.
Specifically, banks sold $2.7bn of
fixed and variable annuities in November, a reduction of 23%
month-to-month, and 37% year-on-year.
In December, banks sold $2.8bn,
about half of the $5.4bn in sales recorded in December 2008.
Bank sales of fixed annuities were
particularly hard-hit, totalling $1.7bn in November, a 32% fall
compared with the previous month and 47% down on sales in November
The deterioration continued in
December 2009, with bank fixed annuity sales at $1.6bn – down 6%
from November and 63% below the record of $4.3bn set in December
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Banks sales were much more heavily
impacted than sales of fixed annuities in general, new data from
independent research consultancy Beacon Research indicates.
According to the annuity market
specialist, total fixed annuity market sales for the fourth quarter
of 2009 were $20.4bn, down 8% from $22.1bn in the previous
Total sales for 2009 were down 1.5%
compared with 2008 to $105.1bn.
Commenting on the decline in bank
fixed annuity sales, Kehrer-LIMRA managing director Scott Stathis
said that since the all-time high in December 2008, fixed annuity
sales have declined consistently through 2009, and variable annuity
sales have not stepped up to take their place as they normally
“Instead mutual funds sales – which
are less profitable to banks – have ramped up,” he said.
Stathis added that fixed annuities have also been
“rate-challenged,” with the average effective rate on five-year
fixed annuities eroded by 45% since December 2008 compared with a
34% fall in the five-year certificate of deposit rates percent in
the same period.