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

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

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