Total Annuity Sales Continue to Decline in the Third Quarter

WINDSOR, Conn., Nov. 18, 2009—Total individual annuity sales fell 10 percent in the third quarter as compared to prior quarter; and 17 percent from the third quarter of 2008, to reach $54.7 billion, according to LIMRA's U.S. Individual Annuities quarterly sales survey.

These results mark the third consecutive quarter over quarter decline for annuity sales. Year-to-date, total individual annuity sales declined eight percent, to reach $181.6 billion.

“Despite broad equity market gains since March, variable annuities (VA) sales have been flat for two consecutive quarters (as compared to the prior quarter),” said Joe Montminy, research director for LIMRA's annuity research. “While VA sales historically follow market trends, we believe that the decline in 1035 exchanges is impacting current VA growth.”

Third quarter VA sales are down one percent from the second quarter 2009; and down 16 percent as compared to third quarter 2008. VA sales recorded $31.7 billion in the third quarter; and $94 billion in sales during the first nine months of 2009.

Fixed annuity sales continued to decline in third quarter of 2009. After experiencing incredible growth in the fourth quarter of 2008 and hitting an all-time high in the first quarter of 2009, fixed annuities began to shrink in the second quarter 2009. This trend continued in the third quarter, when fixed annuity sales dropped 20 percent quarter over quarter and 19 percent as compared to third quarter 2008.

Book value sales dropped 25 percent when compared to the second quarter 2009; and 23 percent as compared to third quarter 2008, to reach $10.3 billion. This is the second consecutive quarter of 25 percent declines quarter over prior quarter. Despite these declines, book value sales are up 24 percent in the first nine months of 2009 benefiting from a very strong first quarter. MVAs dropped 32 percent from the second quarter and 46 percent as compared to prior year.

After reaching a record high in the second quarter, indexed annuity sales remained resilient, totaling $7.3 billion in the third quarter. While this quarter is down ten percent from the second quarter, it still among the top quarterly sales for indexed annuities. Year-to-date, indexed annuity sales are up 15 percent.

A list of the top 20 writers of overall total annuities, variable annuities and fixed annuities ranked by third quarter 2009 sales results, as well as the third quarter Annuities Industry Estimates Chart can be found in the updated Fact Tank.

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