EVANSTON, Ill., Aug. 25, 2011 (GLOBE NEWSWIRE) -- Second quarter 2011 fixed annuity sales overcame falling interest rates to post their second consecutive quarter-to-quarter increase. Results improved 8% from the prior quarter to $20.4 billion, according to the Beacon Research Fixed Annuity Premium Study. There was growth in all but one product type. Income annuities advanced 30% to $2.3 billion. Indexed annuities grew 18% to $8.4 billion. Fixed rate MVAs1 rose 4% to $1.5 billion. Fixed rate non-MVAs fell 5% to $8.2 billion.
"We anticipated the sequential growth in both indexed and income annuities," said Jeremy Alexander, CEO of Beacon Research. "Indexed annuity cap rates trended lower, but still looked good compared to the quarter's declining fixed rates on annuities and CDs. Their guaranteed lifetime income benefits were especially attractive during a time of reduced consumer confidence. The secure personal pensions provided by income annuities were appealing for the same reason. We also expected falling interest rates to dampen sales of both fixed rate annuity types. But yield-seeking purchasers apparently appreciated the somewhat higher rates offered by MVAs."
Year-to-date 2011 sales increased 3% to $39.3 billion from first half 2010. Growth in fixed rate non-MVAs (8% to $16.8 billion) and income annuities (2% to $4.0 billion) more than compensated for declines in fixed rate MVAs (- 4% to $3.0 billion) and indexed annuities (-1% to $15.6 billion).
Sales were flat compared to second quarter 2010. Improvements in fixed rate non-MVAs (up 4%) and income annuities (up 3%) were balanced by fixed rate MVA and indexed annuity declines of 12% and 2%, respectively.
Western National was again the quarter's sales leader. Allianz and New York Life traded places, with Allianz in second place and New York Life coming in third. American Equity and Aviva continued in fourth and fifth place, respectively. Second quarter results for the top five Study participants were as follows:
| Total Fixed Annuity Sales (in thousands) | |
| Western National Life | 2,038,024 |
| Allianz Life | 1,871,993 |
| New York Life | 1,671,889 |
| American Equity Investment Life Insurance Co. | 1,108,799 |
| Aviva USA | 1,078,332 |
In sales by product type, the top companies were unchanged from the prior quarter: Fixed rate MVA – American National; Fixed rate non-MVA – Western National; Indexed – Allianz, and; Income – New York Life.
Security Benefit Life was the new leader in sales through independent broker-dealers and Pacific Life took the lead in wirehouses.
The other top companies by distribution channel were unchanged. Western National was the dominant bank channel carrier. Allianz was tops among independent producers. New York Life led in captive agent and large/regional broker-dealer sales. USAA was the leading direct/third party channel company.
Among more than 600 products tracked by the Study, two channel leaders' annuities placed in the top five as well. Products from Allianz and New York Life traded places, with the Allianz MasterDex X regaining bestseller status and the New York Life Secure Term Fixed Annuity coming in second. New York Life's Lifetime Income Annuity moved up a notch to take third place. Lincoln Financial Group rejoined the top five with Lincoln New Directions in fourth place. American Equity's Retirement Gold moved down two notches to come in fifth.
| Rank | Company Name | Product Name | Product Type |
| 1 | Allianz Life | MasterDex X | Indexed |
| 2 | New York Life | NYL Secure Term Fixed Annuity | Fixed Rate Non-MVA |
| 3 | New York Life | NYL Lifetime Income Annuity | Income |
| 4 | Lincoln Financial Group | Lincoln New Directions | Indexed |
| 5 | American Equity | Retirement Gold | Indexed |
ING's Secure Index 7 became the top independent broker-dealer product, and Pacific Life's Pacific Frontiers II was the new wirehouse bestseller. One of Western National's proprietary bank products replaced the company's Flex 7 as the leading bank channel fixed annuity. The remaining top products by channel were unchanged from the prior quarter.
| Channel | Company | Product | Product Type |
| Banks and S&Ls | Western National | Proprietary Bank Product A | Fixed Rate Non-MVA |
| Captive Agents | New York Life | NYL Lifetime Income Annuity | Income |
| Direct/Third Party | USAA | Flexible Retirement Annuity | Fixed Rate Non-MVA |
| Independent Broker-Dealers | ING | Secure Index 7 | Indexed |
| Independent Producers | Allianz Life | MasterDex X | Indexed |
| Large/Regional Broker-Dealers | New York Life | NYL Secure Term Fixed Annuity | Fixed Rate Non-MVA |
| Wirehouses | Pacific Life | Pacific Frontiers II | Fixed Rate MVA |
"Looking ahead, we believe that indexed and income annuities will continue to do well. The outlook for fixed rate annuities is more uncertain. Sales may benefit from the continued flight to safety and wider credit spreads or decline due to very low credited rates," Alexander concluded.
About the Beacon Research Fixed Annuity Premium Study
The quarterly Study is the first and only source to track and analyze product-level fixed annuity sales on an ongoing basis. Providing timely market intelligence of the highest quality, it's designed to report what's moving in each channel and why.
About Beacon Research
Beacon Research tracks fixed, indexed and variable annuity sales, rates and features, and provides web-based systems at www.annuitynexus.com for distributors and insurance companies. Beacon also licenses information and software tools to other platforms, including EbixExchange's AnnuityNet 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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1 MVAs or market value adjustments pay a premium on withdrawals when interest rates fall and reduce withdrawals when rates rise. Fixed rate non-MVAs are also known as book value annuities.