Beacon's Fixed Annuity Premium Study Reports Third Quarter's Fixed Annuity Sales

An Indexed Annuity Leads Bank Channel Sales for the First Time

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| Source: Beacon Research

EVANSTON, Ill., Nov. 23, 2010 (GLOBE NEWSWIRE) -- U.S. sales of fixed annuities were an estimated $19.5 billion in third quarter 2010, according to data from the Beacon Research Fixed Annuity Premium Study.1 A 0.3% increase kept sales essentially flat quarter-to-quarter. Relative to third quarter 2009, results were 12% lower. Estimated year-to-date sales of $55.4 billion were 35% below YTD 2009, which was the strongest three quarter period in the Study's 8-year history.  

Third quarter's indexed annuity sales climbed to $8.6 billion their second consecutive 8-year record – and hit a record-high 44% of fixed annuity sales. Estimated results of the other product types were: book value2-$6.9 billion; fixed income3-$2.3 billion, and; market value-adjusted2 (MVA) -$1.8 billion. MVAs were 14% ahead of the prior quarter; indexed annuities were up 4%. Book value and income annuity sales both declined about 5%. Compared to third quarter 2009, indexed and income annuity results advanced 17%. Book value and MVA sales were down 31% and 39%, respectively.

On a year-to-date basis, indexed annuities also had Study-record sales and share of sales. Estimated YTD results by product type were: indexed - $23.4 billion; book value - $21.0 billion; fixed income - $6.5 billion, and; MVA - $4.5 billion.  Income annuity sales improved 7% and indexed annuities were up 4% compared to YTD 2009. Book value sales fell 51%, and MVAs dropped 65%. Indexed annuities claimed 42% of YTD 2010 sales.

Allianz moved up a notch to become the quarter's sales leader, replacing New York Life, which came in third. Aviva advanced to second from third place. American Equity (NYSE:AEL) moved up a notch to come in fourth. Lincoln Financial Group (NYSE:LNC) rejoined the top five in fifth place. Results for the top five Study participants were as follows:

  Total Fixed Annuity Sales (in thousands)
Allianz Life4 1,970,632
Aviva USA 1,655,341
New York Life 1,442,571
American Equity Investment Life Insurance Co.  1,220,590
Lincoln Financial Group 956,277

By product type, New York Life replaced Western National as book value sales leader and continued as the dominant income annuity company. Great American led in MVA sales, supplanting American National. Allianz remained the leading issuer of indexed annuities.

Given the strength of indexed annuities in third quarter, it's not surprising that they dominated the top product list. An indexed annuity from Aviva USA – BalancedAllocation Annuity 12 – joined the top five in fifth place. The remaining top products were also second quarter bestsellers, though some rankings shifted. The Allianz MasterDex X indexed annuity remained the leading product. Lincoln Financial Group's New Directions (also an indexed annuity) moved up four places to come in second. Another indexed product, American Equity's Retirement Gold, continued in third place. The New York Life Income Annuity came in fourth. Third quarter results include sales of more than 500 products – a Study record.

Rank Company Name Product Name Product Type
       
1 Allianz Life MasterDex X Indexed
2 Lincoln Financial Group New Directions Indexed
3 American Equity Retirement Gold Indexed
4 New York Life NYL Lifetime Income Annuity Income
5 Aviva USA  BalancedAllocation Annuity 12 Indexed

Three of these annuities also led distribution channel sales. New Directions was the new bank bestseller and the first indexed annuity to dominate bank sales in the Study's history. MasterDex X and the New York Life Lifetime Income Annuity continued to lead sales in the independent producer and captive agent channels, respectively. Pacific Frontiers II (an MVA) replaced another Pacific Life product as the wirehouse bestseller. The remaining channel leaders were repeat performers, with the New York Life Select Five Fixed Annuity tops among large/regional broker-dealers and MassMutual's RetireEase income annuity the dominant independent broker-dealer product.

Channel Company Product Product Type
       
Banks and S&Ls Lincoln Financial Group  New Directions Indexed
       
Captive Agents New York Life NYL Lifetime Income Annuity Income
       
Independent Broker-Dealers MassMutual  RetireEase Income
       
Independent Producers Allianz Life MasterDex X Indexed
       
Large/Regional Broker-Dealers New York Life NYL Select 5 Fixed Annuity Book Value
       
Wirehouses Pacific Life Pacific Frontiers II MVA

Credited rates fell during third quarter, with top rates on multi-year guarantee annuities dropping from 3.9% to 3.5%. But the fixed annuity advantage over Treasury rates grew, and this helped MVA sales increase for the second consecutive quarter. The yield curve flattened, and fixed rate annuity sales by interest guarantee period shifted somewhat shorter as a result.

"Consumer demand for conservative investments like fixed annuities continues to be very strong," said Jeremy Alexander, CEO of Beacon Research. "But the current interest rate environment poses a challenge for issuers of these annuities because it pressures profitability. Until the interest rate environment changes, these profit pressures will motivate many issuers to limit sales."  

About the Beacon Research Fixed Annuity Premium Study

The quarterly Study is the first and only source to track and analyze product-level fixed annuity sales on an ongoing basis. Providing timely market intelligence of the highest quality, it's designed to report what's moving in each channel and why

About Beacon Research

Beacon Research tracks fixed, indexed and variable annuity sales, rates and features, and provides web-based systems at www.annuitynexus.com for distributors and insurance companies. Beacon also licenses information and software tools to other platforms, including EbixExchange's AnnuityNet annuity automation platform. Beacon's fixed annuity benchmark series -- the industry's first -- is available through Ibbotson Associates. Directly and through strategic alliances, Beacon information can be accessed by hundreds of financial institutions and distributors.

The Beacon Research logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=509

1 Sales figures do not include structured settlements or employer-sponsored retirement plans.

2 Book value fixed annuities pay a declared rate of interest for a specified period. A market value adjustment (MVA) is not imposed if the holder withdraws assets before the end of the contract term. MVA products also pay a declared rate of interest for a specified period, and do impose such an adjustment.

3 Includes both immediate and deferred income annuities.

4 Allianz Life Insurance Company of North America is a subsidiary of Allianz AG (NYSE:AZ).

5 Aviva USA is a subsidiary of Aviva plc (LSE:AV).

Beacon Research
Judith Alexander
847.864.5447