Variable Annuity Sales Reach Pre-Crisis Levels

Fixed Annuities Show Resiliency in Low Interest Rate Climate; Morningstar and Beacon Research Data Show Combined Industry-wide Sales Growth of Nearly 8 Percent in 2011

WASHINGTON, D.C. - The Insured Retirement Institute (IRI) today announced final fourth quarter and year-end 2011 results for the United States annuity industry, based on data reported by Morningstar, Inc. and Beacon Research. Net variable annuity sales in 2011 were the strongest since 2007, topping $27.7 billion-a 28 percent increase from 2010, according to Morningstar. Net variable annuity sales for the quarter increased by nearly 35 percent to $7.2 billion compared with $5.4 billion for the same period in 2010. While quarter-to-quarter net variable annuity sales declined, the fourth quarter was the second strongest quarter since mid-2008.

Industry-wide fourth quarter annuity sales topped $54.5 billion. Although sales were 6.6 percent lower than from $58.1 billion during the third quarter, industry-wide yearly sales were $231.1 billion in 2011 compared with $214.6 billion in 2010.

"Driven by the highest yearly variable annuity sales levels since 2007, industry-wide annuity sales in 2011 grew 7.7 percent compared to 2010," said IRI President and CEO Cathy Weatherford. "These sales results demonstrate that the marketplace for insured retirement products is truly robust with a significant number of investors looking to attain lifetime income as part of their retirement strategy."  

Fixed annuity sales for 2011 totaled $75.6 billion, down 1.1 percent from $76.4 billion in 2010, according to Beacon Research. Fixed annuity sales for the fourth quarter dipped 8.8 percent to $17.3 billion from $19 billion during quarter three, but were relatively flat compared with 2010 fourth-quarter sales of $17.6 billion. There were $8.3 billion in qualified sales and $9.0 billion in non-qualified sales in the fourth quarter.

"Considering the interest rate decline, fixed annuity sales have proven quite resilient due to the need for guaranteed retirement income," said Beacon Research President Jeremy Alexander. "The strong income annuity growth is especially noteworthy. These products are finally getting the attention they deserve for their ability to provide personal pensions. Guaranteed lifetime income benefits have sustained indexed annuity sales, despite lower caps and participation rates."

According to Morningstar, variable annuities also had their strongest overall year since 2007 in total sales, which increased more than 12 percent to $155.5 billion from $138.2 billion in 2010. Variable annuity sales for the fourth quarter were $37.2 billion, down 5 percent from $39.1 billion in the previous quarter. Variable annuity net assets totaled $1.5 trillion during the fourth quarter, a 5.6 percent increase from $1.42 trillion during the third quarter. There were $25.6 billion in qualified sales and $11.6 billion in non-qualified sales in the fourth quarter.

"While gross sales show signs of leveling off, the sustained improvement in net cash flow indicates that variable annuities are increasingly attracting new money versus generating sales through exchanges of existing contracts," said Morningstar Director of Insurance Solutions Frank O'Connor

For complete annuity sales reporting data, please access the PDF version of the release.

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 products and services for individuals, financial advisors, and institutions. Morningstar provides data on approximately 375,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 5 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment management subsidiaries and has more than $180 billion in assets under advisement and management as of Dec. 31, 2011. The company has operations in 27 countries.

About Beacon Research: Beacon Research is an independent research company and application service provider founded in 1997 and based in Evanston, Ill. 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 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.

Danielle Holland

Variable Annuity Sales Reach Pre-Crisis Levels