EVANSTON, Ill., March 5, 2009 (GLOBE NEWSWIRE) -- U.S. sales of fixed annuities were an estimated $107 billion in calendar year 2008, up 60% from 2007, according to new data from the Beacon Research Fixed Annuity Premium Study. Fourth quarter's overall results were an estimated $34.1 billion -- 90% above those of fourth quarter, 2007 and 23% higher than the previous quarter. Fourth quarter's estimated sales were the strongest since the Study began in 2003, setting a six-year record for the third quarter straight. These estimates are based on sales of 53 insurance companies representing an estimated 86% of the market(1).
By product type, estimated sales in fourth quarter, 2008 were: book value(2) -- $17.1 billion; market value-adjusted (MVA) -- $7.4 billion; indexed -- $7.2 billion, and; immediate -- $2.4 billion. There were big increases in all product types relative to fourth quarter, 2007. MVA sales were more than 3-1/2 times higher, while book value results more than doubled. Immediate and indexed sales rose 22% and 12%, respectively. Compared to the prior quarter, there were also increases in all product types; MVAs -- 76%, book value -- 21%, indexed -- 3% and immediate -- 3%.
MetLife assumed overall sales leadership among Study participants. Its fourth quarter sales were quadruple those of the first three quarters combined. New York Life, Aviva USA and AEGON/Transamerica Companies each moved down one place as a result. Allianz remained in fifth place. Fourth quarter results for the top five Study participants were as follows:
Total Fixed Annuity Sales (in thousands)
----------------------------------------
MetLife (NYSE:MET) 4,136,491
New York Life 2,573,597
Aviva USA(3) 2,341,901
AEGON/Transamerica Companies
(NYSE:AEG US) 2,274,266
Allianz Life(4) 1,358,131
In terms of sales by product type, MetLife also became the MVA sales leader. AEGON/Transamerica was the new leader in book value sales. Aviva and New York Life again took top honors in indexed and immediate annuity sales, respectively.
Two MVAs issued by MetLife were fourth quarter's best-selling products, with Fixed Annuity FA in first place, followed by MetLife Target Maturity. Aviva's Income Select Bonus came in third. It was again the leading indexed annuity and the only one in the top five. The New York Life Fixed Annuity placed fourth but remained the top book value product. It was followed by Transamerica Capital Builder 2007, a book value annuity issued by AEGON/Transamerica Companies and a top five product for the third consecutive quarter. Fourth quarter results include sales of some 410 products.
Rank Company Name Product Name Product Type
---- ------------ ------------ ------------
1 MetLife Investors Fixed Annuity FA MVA
2 MetLife MetLife Target Maturity MVA
3 Aviva-American
Investors Life Income Select Bonus Indexed
4 New York Life NYL Fixed Annuity Book Value
5 AEGON/Transamerica Transamerica Capital
Cos. Builder 2007 Book Value
1. Sales figures include fixed rate (book value and MVA), indexed
and immediate annuities. They do not include structured
settlements.
2. Book value fixed annuities pay a declared rate of interest for a
specified period. A market value adjustment (MVA) is not imposed
if the holder withdraws assets before the end of the contract
term. MVA products also pay a declared rate of interest for a
specified period, and do impose such an adjustment.
3. Aviva USA is a subsidiary of Aviva plc (LSE:AV).
4. Allianz Life Insurance Company of North America is a subsidiary
of Allianz AG (NYSE:AZ).
5. This total excludes immediate annuities.
Four of these top products were also distribution channel bestsellers. MetLife Investors' Fixed Annuity FA became the leading annuity in the independent broker-deal channel. MetLife Target Maturity was the new bestseller among large/regional broker-dealers and wirehouses. New York Life had the leading bank product once again with its New York Life Fixed Annuity. Aviva's Income Select Bonus remained tops in the independent producer channel. State Farm's Future Income Plus (an MVA) was the new bestseller among captive agents.
Channel Company Product Product Type
------- ------- ------- ------------
Banks and S&Ls New York Life NYL Fixed Annuity Book Value
Captive Agents State Farm Future Income Plus MVA
Independent
Broker-Dealers MetLife Investors Fixed Annuity FA MVA
Independent
Producers Aviva-Am. Income Select
Investors Bonus Indexed
Large/Regional
Broker-Dealers MetLife Investors MetLife Target
Maturity MVA
Wirehouses MetLife Investors Fixed Annuity FA MVA
Credited rates of 5% or more were available on rate terms of five years or longer throughout fourth quarter. But there wasn't much to be gained by locking in a rate for more than seven years. As a result, sales of both book value and MVA annuities continued moving to rate terms in the five to seven year range.
"A combination of economic conditions made for record sales in fourth quarter, with double-digit increases in all product types from a year earlier," said Jeremy Alexander, CEO of Beacon Research. "Not only did fixed rate annuities have an advantage over the conservative interest-bearing alternatives once again, but minimal inflation made those rates worth more in real terms. Fourth quarter's bear market and economic uncertainty motivated a continued flight to safety that favored fixed annuities and other conservative investments. Going forward, we expect more record sales because we think similar conditions will prevail in first quarter and throughout 2009. But some of the key players are likely to change, with business flowing to the strongest companies."
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. The extent of 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 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 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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