Annuity sales are back! Or are they?

For fixed annuities, the year-to-year numbers are actually down a whopping 30.2%, from $27.8 billion in 2Q 2009. This is not so surprising, really, given the larger risk profile fixed annuities impose on insurers, and given larger trends among insurers to scale back on their FA business in favor of more variable annuities. The overall annuity picture is not quite as bad, but still discouraging, down 9.8% from 2Q 2009s level of %59.6 billion.

If variable annuities are the product of the future, then their lackluster performance as of late shows that this is still a hard environment to make a sale in. Looking back to Q1, National Underwriter reported that variable annuity sales were already down slightly from 4Q 2009, and up just a little compared to Q1 2009. In that article, written by Morningstar director of insurance solutions Frank OConnor, the reality for variable annuities is less than clear-cut. Why? Living benefits are more expensive and restricted, and the industry is likely to see only modest growth unless more advisors work harder to sell the product and, frankly, more buyers are made to understand what this product really has to offer.

In the meantime, mixed economic news continues to trickle forth in terms of joblessness and low GDP growth, both of which have pulling the larger financial markets in different directions. The economy is uncomfortably close to entering the second half of a double-dip recession. And while the acute market turbulence of 2008 and 2009 seems to have leveled off, ongoing economic woes will surely play a role not just in what kind of annuity product clients wish to buy, but whether they want to buy anything at all.