US fixed annuity sales continue to roar ahead

Based on LIMRA’s data, fixed annuity sales in
the first quarter of 2009 soared by 74 percent compared with the
same quarter in 2008 to $35.6 billion. In the process, fixed
annuities outsold variable annuities – which registered sales of
$30.7 billion for the second consecutive quarter.

Variable annuity sales experienced their
fourth consecutive quarter of double-digit sales, slumping 27
percent compared with the first quarter of 2008.

“The last time fixed annuities outsold
variable for two consecutive quarters was in the first half of
1995,” said LIMRA’s annuity research director.

He continued: “Consumers, still leery of the
volatile stock market and looking for secure, competitive
guaranteed rates of return, continued to invest more money into
fixed annuities for their retirement income needs.”

In addition to the significant growth in fixed
annuity sales between the first quarters of 2008 and 2009, the two
quarters also saw a considerable jockeying for position within the
ranks of the top-10 sellers. This is reflected in data supplied by
independent fixed annuity research firm Beacon Research.

New York Life (NYL) and Aviva USA held
steadfastly onto their respective second and third positions during
the two quarters, improving their respective market shares from 7.5
percent and 6.8 percent in the first quarter of 2008 to 9.8 percent
and 6.9 percent in the first quarter of 2009.

However, leading the pack in the first quarter
of 2009 was Metlife, with sales of $3.63 billion giving it a market
share of 10.2 percent. Metlife roared into the lead in the variable
annuity sector in the fourth quarter of 2008 when it recorded sales
of $4.13 billion, quadruple the level it achieved in the first
three quarters of 2008 combined.

Indeed, Metlife had not even ranked among the
top-10 variable annuity producers in the third quarter of 2008. NYL
ranked first in that quarter and Aviva USA second.

Another insurer to have made significant
inroads into the variable market is River Source Life Insurance
(RSLI), a unit of Ameriprise Financial, a financial services
company spun-off by American Express in 2005.

In the first quarter of 2009 RSLI achieved
sales of $2.26 billion to give it a market share of 6 percent,
placing it in fourth position. This compares with a market share of
1.7 percent in 2008 as a whole when it ranked 19th.

Also making its debut in the ranks of top-10
producers in the first quarter of 2009 was USAA Life, a mutual
insurer focused on customers with a military background. With sales
of $751 million the insurer achieved 10th position.

Biggest loser in the fixed annuity market was
AIG Annuity Assurance, which slid from top position in the first
quarter of 2008 to sixth in the first quarter of 2009. This came on
the back of a 43 percent fall in sales from $2.72 billion in the
first quarter of 2008 to $1.54 billion in the first quarter of 2009
dragging the insurer’s market share down from 14.5 percent to 4.3
percent.

Falling out of top-10 rankings were Hartford
Life and AllState.