LIMRA: Total Annuity Sales Improve from Prior Quarter; Fall from Prior Year

Indexed Annuity Sales Continue

Strong Performance In the Second Quarter 2012

WINDSOR, Conn. Aug. 20, 2012 – Total annuity sales in the second quarter 2012 improved four percent from the first quarter 2012, reaching $57.0 billion, according to LIMRA’s second quarter 2012 U.S. Individual Annuities Sales survey, which represents data from 95 percent of the market.

However, second quarter 2012 annuity sales were eight percent lower than the second quarter of 2011.  Year-to-date, total annuity sales dropped eight percent compared to the first half of 2011, to reach $111.8 billion.

“The current economic conditions remain challenging for most insurers, driving overall annuity sales down,” said Joseph Montminy, assistant vice president, LIMRA annuity research.  “The one bright spot this quarter were indexed annuity sales, which are on pace to have a record year.”
Indexed annuity sales rose six percent in the second quarter compared to the same quarter last year, to reach $8.6 billion.  In the first half of 2012, indexed annuities jumped 10 percent compared to the first six months of 2011.  For the fourth consecutive quarter, indexed annuities outperformed traditional fixed annuities, capturing 47 percent of the fixed annuity market.
Indexed annuity sales are benefiting from the guaranteed lifetime withdrawal benefit (GLWB) riders being offered.  Eighty-seven percent of indexed annuity sales offered a GLWB in the second quarter, with 71 percent electing a GLWB rider, which is the highest level since LIMRA began tracking indexed GLWB election rates one year ago.
While variable annuity sales dropped five percent in the second quarter 2012 compared to the second quarter 2011, VA sales did perform five percent better than in the first quarter of 2012.  VA sales equaled $38.6 billion in the second quarter and recorded $75.4 billion for the first six months of 2012.
Total fixed annuities in the second quarter dropped 14 percent to $18.4 billion when compared to the same quarter one year ago. Year-to-date, fixed annuity sales were down 12 percent to $36.4 billion.
Fixed immediate annuity sales fell 14 percent in the second quarter compared to the same period in 2011, totaling $1.9 billion.  Fixed immediate annuity sales reached $3.7 billion at the mid-year mark.
Book-value sales plunged 34 percent in the second quarter, resulting in a 33 percent drop for the first half of 2012.  Book-value totaled $5.5 billion in the second quarter, to reach $11.3 billion year to date.
MVA sales in the second quarter totaled $1.2 billion, falling 14 percent. In the first half of 2012, MVA sales were $2.5 billion, down 11 percent compared to prior year.
A list of the top 20 writers of overall total annuities, variable annuities and fixed annuities ranked by second quarter 2012 sales results, as well as the second quarter Annuities Industry Estimates chart, can be found in the updated Data Bank.