Annuity Trends Hint At Positivity

Some interesting happenings in the annuity market could likely be a jump-start for the industry, according to Insurance News Net’s “Annuity Surprises Could Be Jump-Starters.”  Annuity sales have been slower than in the past, but some recent data hints that overall sales could be increasing soon.  The DTCC’s Insurance & Retirement Services reported a 1% increase in annuity inflows between April’s $7.4 billion and May’s $7.5 billion.  This small increase is important because the overall activity had been down in the past 13 months.  This could mean that either more companies are using the DTCC’s annuity processing service or that there have been more transactions by the companies already using it, or both.

CANNEX reports an additional 9,000 quotes for single premium income annuities between the first quarter and the second quarter of 2012.  They track financial advisors’ searches for SPIA premiums, products, and companies in the United States.  Either more advisors are seeking quotes for their clients or more quotes are being sought from the same advisors, but it looks to be positive annuity news either way.  It makes sense since Beacon Research found a 23% increase in income annuity sales between the first quarter of 2011 and the first quarter of 2012.  We’ll have to see what happens with the second quarter numbers when they come out.

The Dodd Frank Act of 2010 mandated federal agencies to define financial terms such as swaps.  We finally have completion of many definitions from the Commodities Futures Trading Association and the SEC.  Annuity and life insurance experts did not want their products to be included in the definition of swaps so that they didn’t have to follow additional rules and make changes.  As it stands now, the final rules don’t look to contain annuity and life insurance products in the definition.  It doesn’t look like anything will change in the definitions before they are implemented and the rules take effect.  We’ll continue to follow developments to the annuity industry.

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