EVANSTON, Ill., May 24, 2006 (PRIMEZONE) -- U.S. sales of fixed annuities reached $17.3 billion in first quarter, 2006, a 3% increase from the previous quarter. Improvement was steady throughout first quarter, with March showing the highest monthly sales. But results were 4% below the same period last year, according to new data from the "Beacon Research Fixed Annuity Premium Study" based on sales of 51 insurance companies. First quarter indexed annuity sales were $7.2 billion, up almost 8% from the prior quarter and 13.1% above first quarter, 2005.
MasterDex, an indexed annuity issued by Allianz Life Insurance Company of North America (note 1), was the quarter's top-selling product in the Study for the seventh consecutive period, followed by Allstate Financial's (NYSE: ALL) Preferred Performance. Two New York Life book value products -- LifeStages/MainStay Single Premium Fixed Annuity and LifeStages/MainStay Preferred Fixed Annuity -- were number three and four, respectively (note 2). Secure Index Opportunities Plus, an indexed annuity issued by ING USA (NYSE: ING), took fifth place. First quarter results include sales of some 196 products.
Rank Company Name Product Name Product Type
---- ------------------ ------------------------------ ------------
1 Allianz MasterDex Indexed
2 Allstate Financial Preferred Performance Book Value
3 New York Life LifeStages (and MainStay)
Single Premium Fixed Annuity Book Value
4 New York Life LifeStages (and MainStay)
Preferred Fixed Annuity Book Value
5 ING USA Secure Index Opportunities Plus Indexed
Two of the top five products also led sales in a distribution channel, with the Allianz MasterDex once again the best seller among independent producers and Allstate's Preferred Performance the bank channel leader. The top seller among captive agents was New York Life's LifeStages Choice Fixed Annuity, a book value product. For the third consecutive quarter, the sales leader among independent broker-dealers was John Hancock's GPA Plus, another book value product(a). But MVA products continued to lead sales in the other B-D channels. MetLife's Fixed Annuity FA took first place among large/regional B-Ds. Allstate's Choice Rate was the best-seller among wirehouses, a position it has held since third quarter, 2005 (note 3).
Channel Company Product Product Type
----------------- ------------------ -------- ------------
Banks and S&Ls Allstate Preferred
Performance Book Value
Captive Agents New York Life LifeStages Choice
Fixed Annuity Book Value
Independent
Producers Allianz MasterDex Indexed
Independent
Broker-Dealers(a) John Hancock GPA Plus Book Value
Large/Regional
Broker-Dealers MetLife Fixed Annuity FA MVA
Wirehouses Allstate Financial Choice Rate MVA
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(a) Due to a distribution channel redefinition, John Hancock's
independent broker-dealer sales include revenue formerly
reported as captive agent channel sales.
Notes:
(1) Allianz Life Insurance Company of North America is a subsidiary
of Allianz AG (NYSE:AZ).
(2) New York Life products sold by career agents carry the LifeStages
brand name while those sold through other channels carry the
MainStay brand name.
(3) Number of products for which sales were reported per channel:
Banks and S&Ls - 63; Captive Agents - 84; Independent Producers
- 82; Independent Broker-Dealers - 30; Large/Regional
Broker-Dealers - 33; Wirehouses - 14.
By product type, Allstate's Choice Rate was also first quarter's best-selling market-value adjusted (MVA) product. Genworth had the leading immediate annuity.
Treasury rates rose steadily in first quarter. Rising rate environments tend to favor sales of one-year interest guarantee periods (IGPs) over longer IGPs. But the dominance of one-year IGPs continued the decline seen in fourth quarter, 2005. The one-year IGP accounted for just 22.2% of MVA sales, down significantly from 38.7% in fourth quarter, 2005. The decline was much less dramatic among book value products, from fourth quarter's 85.7% of sales to 83.2% in first quarter, 2006.
"Fixed annuity sales tend to increase as interest rates rise, as was the case in first quarter," said Jeremy Alexander, CEO of Beacon Research. "We expect to see further improvement in fixed annuity sales this year. Rates have continued to rise since first quarter and, more important, the yield curve started to steepen at the end of March. A steeper yield curve will enable insurers to give fixed annuities a competitive rate advantage by investing in longer term fixed income instruments to back annuities with shorter rate terms."
About the Beacon Research Fixed Annuity Premium Study
The quarterly Study is the first to track and analyze product-level fixed annuity sales on an ongoing basis. It features commentary by Milliman USA, a leading actuarial consulting firm recognized for its annuity expertise. Combining Beacon's capabilities in fixed annuity information with Milliman's knowledge and analytic skills, the Study provides timely market intelligence of the highest quality. It's designed to report what's moving in each channel and why. The rapid growth in Study participation is testimony to the need for this information.
About Beacon Research
Beacon Research is an independent research organization founded in 1997. It compiles market intelligence on fixed annuity products for subscribers to its web-based systems at www.annuitynexus.com. Carriers access these systems to support product development, rate setting and competition research. Distributors use them for product analysis and selection. The new AnnuityNexus Sales Support System is an important resource for retention teams and sales desk staff throughout the distribution chain. Beacon also licenses information and software tools to other platforms, including websites for sales representatives and AnnuityNet's annuity automation platform. Beacon's fixed annuity benchmark series -- the industry's first - is available through Ibbotson Associates. Directly and through strategic alliances, Beacon information can be accessed by hundreds of financial institutions and distributors.
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