Fixed annuities continued to attract US investors in droves in the first quarter of 2009, reveals data released by consulting and research organisation LIMRA International.
Based on LIMRA’s data, fixed annuity sales in the first quarter of 2009 soared by 74 percent compared with the same quarter in 2008 to $35.6 billion. In the process, fixed annuities outsold variable annuities – which registered sales of $30.7 billion for the second consecutive quarter.
Variable annuity sales experienced their fourth consecutive quarter of double-digit sales, slumping 27 percent compared with the first quarter of 2008.
“The last time fixed annuities outsold variable for two consecutive quarters was in the first half of 1995,” said LIMRA’s annuity research director.
He continued: “Consumers, still leery of the volatile stock market and looking for secure, competitive guaranteed rates of return, continued to invest more money into fixed annuities for their retirement income needs.”
In addition to the significant growth in fixed annuity sales between the first quarters of 2008 and 2009, the two quarters also saw a considerable jockeying for position within the ranks of the top-10 sellers. This is reflected in data supplied by independent fixed annuity research firm Beacon Research.
New York Life (NYL) and Aviva USA held steadfastly onto their respective second and third positions during the two quarters, improving their respective market shares from 7.5 percent and 6.8 percent in the first quarter of 2008 to 9.8 percent and 6.9 percent in the first quarter of 2009.
However, leading the pack in the first quarter of 2009 was Metlife, with sales of $3.63 billion giving it a market share of 10.2 percent. Metlife roared into the lead in the variable annuity sector in the fourth quarter of 2008 when it recorded sales of $4.13 billion, quadruple the level it achieved in the first three quarters of 2008 combined.
Indeed, Metlife had not even ranked among the top-10 variable annuity producers in the third quarter of 2008. NYL ranked first in that quarter and Aviva USA second.
Another insurer to have made significant inroads into the variable market is River Source Life Insurance (RSLI), a unit of Ameriprise Financial, a financial services company spun-off by American Express in 2005.
In the first quarter of 2009 RSLI achieved sales of $2.26 billion to give it a market share of 6 percent, placing it in fourth position. This compares with a market share of 1.7 percent in 2008 as a whole when it ranked 19th.
Also making its debut in the ranks of top-10 producers in the first quarter of 2009 was USAA Life, a mutual insurer focused on customers with a military background. With sales of $751 million the insurer achieved 10th position.
Biggest loser in the fixed annuity market was AIG Annuity Assurance, which slid from top position in the first quarter of 2008 to sixth in the first quarter of 2009. This came on the back of a 43 percent fall in sales from $2.72 billion in the first quarter of 2008 to $1.54 billion in the first quarter of 2009 dragging the insurer’s market share down from 14.5 percent to 4.3 percent.
Falling out of top-10 rankings were Hartford Life and AllState.