EVANSTON, Ill., Dec. 1, 2006 (PRIME NEWSWIRE) -- U.S. sales of fixed annuities rose to an estimated $19.9 billion in third quarter, 2006, an increase of 9.3% from the previous quarter and 9.9% from third quarter, 2005. But on a year-to-date basis, 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 52 insurance companies. Estimated sales by product type were: book value(a) - $8.12 billion, indexed - $6.52 billion, market value-adjusted (MVA) - $3.68 billion, and immediate - $1.58 billion.
MasterDex, an indexed annuity issued by Allianz Life Insurance Company of North America,(b) was the quarter's top-selling product in the Study for the ninth consecutive quarter. Allstate Financial's (NYSE: ALL) Preferred Performance, a book value product, took the number two spot for the third quarter in a row. Two book value products issued by New York Life -- LifeStages/MainStay Preferred Fixed Annuity and LifeStages/MainStay Single Premium Fixed Annuity were number three and five, respectively.(c) Both were top five products in the last two quarters as well, and the Single Premium Fixed Annuity has been among the top five for 11 consecutive quarters. CRC, an MVA annuity issued by Hartford Life (NYSE: HIG) took fourth place. This was the first time since second quarter, 2003 that an MVA product placed among the top five. Third quarter results include sales of some 243 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) Book Value
Preferred Fixed Annuity
4 Hartford Life CRC MVA
5 New York Life LifeStages (and MainStay) Book Value
Single Premium Fixed Annuity
Four of the top five products also led sales in a distribution channel, with Allstate's Preferred Performance again the bank channel leader, New York Life's LifeStages Preferred Fixed Annuity the long-running best seller among captive agents, the Allianz MasterDex continuing as top product among independent producers, and Hartford's CRC leading wirehouse sales. GPA Plus, a book value product issued by John Hancock (TOR: MFC.TO), kept its top-selling position in the independent broker-dealer channel.(d) Among large/regional broker-dealers, the top product was the Protective Life (NYSE: PL) ProSaver(r) Platinum (an MVA product).(e)
Channel Company Product Product Type
Banks and S&Ls Allstate Preferred Performance Book Value
Captive Agents New York LifeStages Preferred Book Value
Life Fixed Annuity
Independent Allianz MasterDex Indexed
Producers
Independent John Hancock GPA Plus Book Value
Broker-Dealers
Large/Regional Protective ProSaver(r) Platinum MVA
Broker-Dealers Life
Wirehouses Hartford CRC MVA
By product type, New York Life had the leading immediate annuity.
Treasury rates fell in third quarter. Apparently, investors expecting further declines were motivated to lock in longer-term fixed annuity rates. This drove the ongoing trend toward products with longer rate terms. Among book value products, the dominance of one-year interest guarantee periods (IGPs) continued to decline, accounting for 66% of sales (down from 71% in second quarter, 83% in first quarter, and 86% in fourth quarter, 2005). Among MVA products, there was a significant shift to seven-year IGPs.
"Investors once again went long in order to lock in fixed annuity effective yields of about 5% (including bonuses)," said Jeremy Alexander, CEO of Beacon Research. "MVA annuities tend to have longer rate terms, which partly explains their recent popularity. MVA products provided more than 82% of the quarter-to-quarter growth in Study participants' third quarter sales."
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 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 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 Finetre'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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(a) 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.
(b) Allianz Life Insurance Company of North America is a subsidiary of Allianz AG (NYSE:AZ).
(c) New York Life products sold by career agents carry the LifeStages brand name while those sold through other channels carry the MainStay brand name.
(d) GPA Plus has been the Study's leading independent broker-dealer product since second quarter, 2005. Due to a distribution channel redefinition, John Hancock's independent broker-dealer sales include revenue formerly reported as captive agent channel sales.
(e) Number of products for which sales were reported per channel: Banks and S&Ls - 84; Captive Agents - 115; Independent Producers - 139; Independent Broker-Dealers - 51; Large/Regional Broker-Dealers - 42; Wirehouses - 21.