Variable Annuities Post Record New Sales

VA Net Cash Flow Achieves Highest Level in Fourteen Quarters / YTD Fixed Sales Tracking Near 2010 Levels

WASHINGTON, D.C. - The Insured Retirement Institute (IRI) today announced final third quarter results for the United States annuity industry. Net variable annuity sales were $8.8 billion, the highest level in fourteen quarters when third quarter 2007 levels were $8.9 billion. In addition, revised annuity sales for the third quarter show a greater year-to-year growth, and a smaller quarter-to-quarter decline than originally estimated. Third quarter industry-wide sales were $58.1 billion, up 6 percent from third quarter 2010 sales of $54.5 billion. Compared to second quarter sales of $60.4 billion, third quarter sales were down 4 percent.

"The record level of new sales of variable annuities clearly demonstrates that the products are competitive in the marketplace and that they are attracting new investors at an expanded pace," said IRI President and CEO Cathy Weatherford. "The overall strength and growth of the industry is not only underscored by these encouraging numbers, but also that sales are expected to exceed $150 billion for the year. As year-to-date fixed sales remain strong, and on par with 2010 levels, the industry is poised to round out the year on a very high note."

Year-to-date fixed annuity sales were $58.3 billion, 0.8 percent below $58.8 billion in 2010. Fixed annuity sales for the third quarter were $18.9 billion, down from $20.4 billion in the previous quarter, representing a 7 percent decrease. Year-to-year quarterly sales of fixed annuities were down 7.3 percent, with the third quarter of 2010 coming in at $20.4 billion.  

"Thanks to increasingly risk-averse consumers and their demand for guarantees, fixed annuity sales have held up well in spite of exceptionally and persistently low interest rates" said Beacon Research President Jeremy Alexander

Variable annuity sales for the third quarter were $39.1 billion, down 2 percent from $39.8 billion in the previous quarter. Year-to-year quarterly sales of variable annuities posted a 14 percent increase from third quarter 2010 sales of $34.2 billion. Year-to-date variable annuity sales were $118.3 billion, 18 percent above $100.7 billion in 2010. There were $26.4 billion in qualified sales and $12.2 billion in non-qualified in the third quarter.

"The surge in net sales is a very positive development, indicating rapidly growing interest in the use of variable annuity guaranteed income benefits as an important component of a portfolio designed to produce sustainable income throughout one's retirement," said Morningstar Director of Insurance Solutions Frank O'Connor

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

About the Insured Retirement Institute: The Insured Retirement Institute (IRI) is a not-for-profit organization that for twenty years has been a mainstay of service, commitment and collaboration within the insured retirement industry.  Today, IRI is considered to be the authoritative source of all things pertaining to annuities, insured retirement strategies and retirement planning. IRI proudly leads a national consumer education coalition of nearly twenty organizations and is the only association that represents the entire supply chain of insured retirement strategies: our members are the major insurers, asset managers, broker dealers and more than 75,000 financial professionals. 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 and the consumers that rely on their guarantees. Visit today to experience the vast resources of the 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 for compliance review of 1035 exchanges, sales support, conservation and product research. Beacon also licenses information to other platforms, including Insurance Technologies' VisibleChoiceTM 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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Danielle Holland

Variable Annuities Post Record New Sales