The current low interest rates are one of the biggest deciding factors in the third quarter annuity results. Income annuities and indexed annuities were definitely the sales winners in the third quarter, according to the Insured Retirement Institute’s “Income Annuity Sales Set New Quarterly Record.” They took the data from Beacon Research and Morningstar Inc. to determine the third quarter sales results. The total sales in the annuity industry were $52.9 billion. That was a decrease of 4.3% from the second quarter sales of $55.3 billion. The desirable guaranteed income stream of income annuities and indexed annuities helped to strengthen fixed annuity sales.
Income annuity sales were $2.4 billion, which is the highest that they have ever been in a single quarter. Those third quarter sales were an increase of 3.8% from $2.3 billion last quarter and a 6.7% increase from the third quarter of last year’s $2.2 billion in sales. While indexed annuities didn’t have the increase of income annuities, they have held strong in a difficult annuity environment. The $8.7 billion in indexed annuity sales was a small 1.2% decrease from the second quarter, but up .5% from the second quarter of last year. When the U.S. Government’s Accountability Office found that annuities are a good way to fight uncertainty and get a predictable guaranteed income in retirement, many more Americans opened up to the possibility of annuities.
Variable annuity sales went down almost 5% from $38.2 to $36.3 billion in the third quarter. From the third quarter of 2011’s $39.1 billion, sales were down 7.2%. But even with that decline, net variable annuity sales were actually up 44.3% from the second to the third quarter. The total assets of $1.62 trillion is the highest level that variable annuities have ever reached. Since net sales had such a tremendous increase, gross sales likely decreased because there were fewer variable annuity exchanges, not fewer new sales. The income guarantees with variable annuities are keeping them strong in the marketplace. And despite strong showings from income annuities and fixed indexed annuities, total fixed annuity sales decreased 3.1% to $16.6 billion in the third quarter. You can find more details of the IRI’s third quarter summary on their website.
Written by Rachel Summit
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