Variable Annuities More Affordable: IRI

By Staff Writer

August 31, 2010 at 08:00 PM

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Variable annuity sales for the top 17 carriers in the second quarter rose to $11.8 billion, from $10.3 billion in the first quarter, according to the Insured Retirement Institute (IRI).

Part of the reason for the increase was that the cost of variable annuities (VAs) dropped in the second quarter, with the average fee falling 0.04% from the first quarter, IRI says.

Consumers who buy annuities continue to show strong interest in living benefit guarantees, IRI, Washington, reports. More than 83% of VA buyers in the second quarter chose a lifetime guarantee of income in the second quarter, up from 81% in the previous quarter.

Independent broker-dealer accounted for 48% of VA sales for the quarter, up 2.3% over the first quarter. The regional broker-dealer channel accounted for 10.5% of sales for the second quarter, up slightly, while the wirehouse channel dropped to 6.8% of sales, from 9.6% in the previous quarter.

Banks sold 18.5% of VAs, up from about 18%, while proprietary agents sold 15.5%, a slight drop from the previous quarter.

Continued movement of brokers from one firm to another is contributing to a redistribution of annuity sales among channels, according to IRI.

The report also shows sales increases over the previous quarter for all top five VA carriers reporting data. The top five were Jackson National, with $3.7 billion in sales; AXA Financial, $1.7 billion; Nationwide, $1.3 billion; Aegon-Transamerica, $1 billion; and Allianz, $790 million.

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