Only IRI Offers Complete Industry Overview by Reporting Assets, Sales and Net Flows

WASHINGTON, D.C. - The Insured Retirement Institute (IRI) today announced fourth quarter and year end 2010 results for the United States annuity industry. Variable annuity assets reached an all-time record of $1.5 trillion in 2010, while fourth quarter sales rose 18% over 2009 figures to $37.6 billion.

"The annuity industry ended 2010 on strong and secure footing, with fourth quarter sales reaching the highest levels of the entire year," said IRI President and CEO Cathy Weatherford. "Variable annuity assets reached record levels, definitively demonstrating to consumers the value and significance that this investment can play in their overall retirement savings strategy. And given that 2009 sales of fixed annuities were near record setting, it is of little surprise that those figures have settled out some, while remaining very strong. As consumers increasingly turn to insured retirement strategies for guaranteed retirement income, 2011 will offer an unprecedented opportunity for the financial industry to help millions of Americans attain a secure financial future."

Annuity sales for the fourth quarter were $54.3 billion, up slightly from $53.3 billion in the previous quarter, representing a 1.7% increase. Year-to-year quarterly sales of annuities were up 5.7% from $51.3 billion in the fourth quarter of 2009.

Despite the strong performance of variable annuity sales in 2010, industry wide sales dropped to $209 billion compared to 2009 sales of $229 billion. Fixed annuity sales dropped by 31.2% to $71.7 billion, compared to $104.2 billion in 2009.

Fixed annuity sales for the fourth quarter were $16.7 billion, down from $19.5 billion in the previous quarter, representing a 13.7% increase. Year-to-year quarterly sales of fixed annuities were down 14,3%, declining from $19.5 billion in the fourth quarter of 2009.

"It appears that sales of fixed annuities fell relative to fourth quarter 2009 due to future interest rate expectations. Unlike the year-ago quarter, rates were rising in fourth quarter 2010. This created a disincentive to lock in available fixed annuity rates, " said Beacon President and CEO Jeremy Alexander. "These expectations also were a factor in the quarter-to-quarter sales decline.  In addition, the spread between corporate bond and Treasury rates narrowed sequentially. Fixed annuities are backed mainly by bonds, so this made their rates relatively less competitive. But on a year-over-year basis, fixed indexed and income annuity sales did grow and we expect that overall results will increase when the rate environment improves."

Variable annuity sales for the fourth quarter were $37.6 billion, up 10% from $34.2 billion in the previous quarter. Year-to-year quarterly sales of variable annuities were up, posting an 18% increase from fourth quarter 2009 sales of $31.9 billion. Fourth quarter 2010 net sales were $5.4 billion. There were $25.3 billion in qualified sales and $12.3 billion in non-qualified in the fourth quarter.

"Strong equity market performance combined with improving sales and net cash flow drove variable annuity assets above pre-financial crisis levels, and in fact to their highest level since Morningstar/VARDS began tracking variable annuity asset data in 1992," said Morningstar Director of Insurance Solutions Frank O'Connor. 

For additional data reporting, please access the PDF listed below.

About the Insured Retirement Institute: The Insured Retirement Institute (IRI) is a not-for-profit organization and is the authoritative source of all things pertaining to annuities, insured retirement strategies and retirement planning. IRI exists to vigorously promote consumer confidence in the value and viability of insured retirement strategies, bringing together the interests of the industry, financial advisors and consumers under one umbrella. IRI's mission is to: encourage industry adherence to highest ethical principles; promote better understanding of the insured retirement value proposition; develop and promote best practice standards to improve value delivery; and to advocate before public policy makers on critical issues affecting insured retirement strategies. Visit www.IRIonline.org to experience the new, vast resources of the new Insured Retirement Institute for yourself.

About Beacon Research: Beacon Research is an independent research company and application service provider founded in 1997 and based in Evanston, IL. Beacon tracks fixed and variable annuity features, rates and sales. Its quarterly Fixed Annuity Premium Study is the first and only source to analyze fixed annuity sales at the product level. Beacon lowers compliance risk and increases fixed annuity sales with 100% carrier-approved, comprehensive product profiles, spreadsheets and search tools for the advisor/rep websites of banks, TPMs, broker-dealers and marketing organizations. Financial institutions use its systems at www.annuitynexus.com for compliance review of 1035 exchanges, sales support, conservation and product research. Beacon also licenses information to other platforms, including Insurance Technologies' VisibleChoice^TM annuity sales platform, Ebix, Lipper, and Ibbotson Associates. Directly and through strategic alliances, Beacon information can be accessed by hundreds of financial institutions and thousands of advisors.

About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of Internet, software, and print-based products and services for individuals, financial advisors, and institutions. Morningstar provides data on approximately 350,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 4 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. The company has operations in 20 countries and minority ownership positions in companies based in two other countries.

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