Fixed annuity sales in the third quarter were buoyed by the strongest sales quarter ever for income annuities and steady indexed annuity sales, according to Beacon Research. And, based on data reported by Morningstar Inc. and Beacon, income annuity sales increased to nearly $2.4 billion in the third quarter, up 3.8 percent from about $2.3 billion in the second quarter and up 6.7 percent year-over-year from $2.2 billion.
The consumer demand for income annuities has grown steadily during the past two years as consumers seek to generate a guaranteed stream of retirement income, said Cathy Weatherford, IRI president and CEO. The renewed attention to income annuities stems in part from a report issued last year by the U.S. Government Accountability Office, concluding that annuity ownership offers predictable income that can reduce the uncertainty that comes along with managing investments and drawing down assets. I believe this quest for certainty is helping to keep industry-wide sales relatively steady, despite the current low interest rate environment.
Not all of the third-quarter results were good, however. Industry-wide annuity sales for the third quarter reached nearly $52.9 billion, down 4.3 percent from $55.3 billion in the previous quarter.
Indexed annuity sales totaled $8.7 billion, according to the study, down just 1.2 percent from $8.8 billion in the second quarter and up 0.5 percent year over year. Also, third-quarter variable annuity total sales dipped 4.9 percent to $36.3 billion from $38.2 billion in the second quarter of 2012, according to Morningstar; year-over-year, variable annuity total sales decreased 7.2 percent from $39.1 billion.
Despite the decline, variable annuity net sales for the quarter increased by 44.3 percent to $5.8 billion from $4 billion during the second quarter. Within the variable annuity market, there were $24.5 billion in qualified sales and $11.8 billion in non-qualified sales during the third quarter. Variable annuity total net assets reached a new all-time high of $1.62 trillion during the third quarter of 2012, up about four percent from $1.56 trillion in the second quarter.
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