Fixed indexed and income annuity sales shook off a lackluster to start to the year to finish 2010 with some much-needed momentum, according to Beacon Research's latest "Fixed Annuity Premium Study" released this week.
Total annual indexed annuity sales surged 6% in 2010 to more than $31.4 billion while income annuity sales improved 2% to more than $8 billion. Both retirement income investment products claimed their highest share of investment sales in the study's eight-year history at 48% percent and 11%, respectively.
"Both product types benefitted from growing interest in guaranteed lifetime retirement income and protection from downside risk," Beacon Research CEO Jeremy Alexander said in the report.
Annuities and other retirement income vehicles have enjoyed a decent resurgence in the past year as more and more retired and soon-to-be retired investors look for steady, sustained sources of income that will last throughout the duration of their retirement.
In the fourth quarter, indexed annuity sales rose 16% from the year-ago quarter to more than $8 billion and income annuity sales inched up 4% to more than $1.9 billion in the quarter. On a sequential basis, however, sales of indexed annuities and income annuities slid 7% and 11%, respectively.
Fourth quarter indexed annuity sales were an estimated $8 billion, 16% ahead of fourth quarter 2009. Income annuity sales of $1.9 billion advanced 4% from the year-ago quarter. Indexed and income annuity sales fell quarter-to-quarter by 7% and 11%, respectively.
For the year, total U.S. sales of fixed annuities checked in at $71.7%, down 31% from 2009, a sign that investors are still dissatisfied with the poor interest rates and spreads for fixed products. Fourth quarter sales overall for fixed annuities fell 14% from the year-ago quarter.
Annual book value sales tumbled 49% for the year to $26.5 billion while market-adjusted products plunged 61% to $5.8 billion. A similar story was told in the fourth quarter when book value sales declined 38% from the year-ago quarter to $5.6 billion.
Total U.S. sales of fixed annuities were an estimated $71.7 billion in 2010. These results were 31% below 2009, the second-strongest year in the Study’s 8-year history. Estimated fourth quarter sales of $16.7 billion slipped about 14% compared to both the year-ago and prior quarters.
By provider, Allianz led the pack with more than $2 billion in annuity sales in the quarter. American Equity Investment Life Insurance Co. checked in second at $1.55 billion followed by New York Life at $1.4 billion. Aviva USA and Western National Life rounded out the top five at $1.33 and $1.1 billion, respectively.