Annuity Sales Plummet In Banks In July

By Trevor Thomas

September 30, 2005 at 08:00 PM

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Because of a drop in sales of fixed-rate products, annuity sales at banks and savings institutions fell to $3.3 billion in July, down 19% from $3.9 billion in July 2004, according to a Kenneth Kehrer Associates.

Kenneth Kehrer, Princeton, N.J., is reporting $1.7 billion in bank sales of fixed annuities for July, down from $2.5 billion for the comparable month in 2004.

Sales of variable annuities have been slower than sales of fixed annuities for years, but now FA sales levels are comparable to VA sales levels.

Bank sales of variable annuities increased to $1.6 billion, from $1.5 billion.

Banks sold $1.02 in fixed annuities in July for every $1 of VA sales.

In July 2004, the ratio was $1.68 of FA sales for every $1 of VA sales.

FA sales have softened because, for the first time since Kenneth Kehrer started the bank annuity sales survey in 1998, interest rates for bank certificates of deposit were slightly higher than the rates for fixed annuities, says Brad Powell, president of the institutional marketing group at Jackson National Life Insurance Company, Lansing, Mich., the survey sponsor.

The dive in fixed annuity sales would have been even greater without the recent growth in sales of indexed annuities, which have been capturing an increasingly larger share of banks' fixed annuity business, Powell says.

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