During the first quarter of 2011, fixed annuity sales climbed back up to $18.9 billion, an increase of 6 percent. This growth occurred in all four kinds of annuities. The book value products showed especially promising growth, increasing by a total of 12 percent to $8.6 billion. At the same time, the products that are adjusted according to market value grew by 7 percent. Indexed annuity sales didn’t increase much but held steady, growing by 0.2 percent. Finally, income based products grew by 0.8 percent.
Book value annuities growth looked even more promising from a quarter to quarter perspective, with an increase of 42 percent. From this perspective, the industry sales as a whole grew by 7 percent.
Jeremy Alexander is the CEO of Beacon Research. He said that the fixed rate products sold well because of higher rates during the first quarter of the year. The rates were often much higher when compared to the rates offered by Certificates of Deposits in banks. This made the longer term returns much more promising, which made the long terms sales the most productive.
The indexed products lost ground in comparison with the fixed and variable rate products. A relative decline experienced by income-based products was most likely driven by seasonal conditions.
Due to their popularity with companies such as AIG, the annuity market had come under criticism during the financial crisis. Separating the behavior of AIG from this industry has taken some time, but the market for these products is strong due to their reliability as a source of income for retirees.
Sales during the first quarter were led by the performance of Western National, which grew four points. New York Life moved from third to second in the industry, and Allianz took the number three spot. American Equity and Aviva followed close behind.
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