WINDSOR, Conn., Feb. 18, 2010 - After a decline of 26% in the first six months of 2009, variable annuities (VA) were only down 18% for the year, as quarterly VA sales slowly improve from the first quarter, according to LIMRA's U.S. Individual Annuities quarterly sales survey.
VA sales improved slightly in the fourth quarter as compared to the third quarter, up 3% to $32.6 billion but were down 3% when compared to the fourth quarter of 2008. VA sales totaled $127 billion.
"The last time VA sales were at this level was in 2003, at the end of the last financial crisis," said Joe Montminy, assistant vice president and research director for LIMRA's annuity research. "VA sales experienced significant losses from the third quarter of 2008 through first quarter 2009 and while we are seeing VAs slowly recover, the recovery is slower than expected. We attribute this partly to a decline in 1035 exchanges."
Overall individual annuity sales fell in the fourth quarter, down 2% as compared the prior quarter, to reach $53.3 billion. This is a 22% decline from the fourth quarter of 2008. Total individual annuity sales declined 11% in 2009, to reach $234.9 billion.
In fourth quarter of 2009, fixed annuity sales continued its decline, down 10% as compared to the prior quarter and down 40% from the fourth quarter of 2008, where fixed annuities experienced incredible growth. Fixed annuity sales totaled $20.7 billion in the fourth quarter and $107.9 billion for the year, which was a 1% decline from 2008. LIMRA predicts fixed annuities will remain depressed as long as interest rates remain at current levels – CDs are just too attractive in this environment.
