US Indexed Annuity Sales Up 5% in First Quarter
May 23, 2011 by Fran Matso Lysiak
PLEASANT HILL, Iowa May 20 (BestWire) — Sales of indexed annuities in the United States rose to $7.1 billion in the first quarter of 2011, up about 5% from the same period a year ago, according to AnnuitySpecs.com, a firm that tracks the data. However, sales were down 15% from the fourth quarter of last year.
Separately, industry research organization Limra put sales up just 1% in the first quarter from the same period a year ago.
Allianz Life Insurance Company of North America, a unit of Germany’s Allianz SE, remained the market leader in the first quarter, with sales of $1.5 billion, and a 21% market share, according to AnnuitySpecs.com. Its first-quarter sales were up 6.08%. But from the fourth quarter of 2010, sales were down 20.6%. Capturing second place was American Equity Investment Life Insurance Co., with sales of $1.1 billion; Aviva USA, a unit of U.K.-based Aviva plc, ranked third with sales of $842.3 million; and North American Company for Life and Health Insurance, a member of Sammons Financial Group, took fourth place, with sales of $401 million. From last year’s fourth quarter, sales for Aviva were down 32% while American Equity’s sales were down 14.3%. Rounding out the top five was ING USA, part of ING Groep N.V. of the Netherlands, with sales of $382.3 million, according to AnnuitySpecs.com.
Sales “continue to increase in this low-interest rate environment,” said Sheryl J. Moore, president and chief executive officer of AnnuitySpecs.com. “Sales are always down in the first quarter because the fourth quarter sales are usually big as a result of agent incentives and salespeople trying to qualify for trips,” she said.
With these retirement savings and income products, an insurance company invests most of the principal in bonds to ensure the policy will generate a small annual return but the insurer uses a small portion of the premium to buy options in a stock market index. Options that are exercised can result in additional interest credited to a policy, potentially more than an investor might achieve through other fixed-income investments.
Last month, Tom Marra, president and CEO of Symetra Financial Corp. (NYSE: SYA) told BestWire that the current threat to U.S. life insurance companies is the low-interest rate environment. “It’s hard to mature the guarantees when the big part of the fuel to be able to provide lifetime guarantees comes from our investing,” he said. Life insurers invest primarily in fixed income. “Fixed income is not fueling like it used to and that makes it a challenge to make your returns and still provide a good product,” Marra said (BestWire, April 13, 2011).
Symetra’s retirement division is predominantly in fixed deferred annuities. But on April 18, the company was entering the indexed annuity business — sold mostly through banks — for the first time, he said.
(By Fran Matso Lysiak, senior associate editor, BestWeek: email@example.com)BN-NJ-05-20-2011 1639 ET #