EVANSTON, Ill., June 1, 2007 (PRIME NEWSWIRE) -- U.S. sales of fixed annuities fell to an estimated $13.74 billion in first quarter, 2007, a decrease of 17.3% from the previous quarter and 18.4% from first quarter, 2006, according to new data from the Beacon Research Fixed Annuity Premium Study based on sales of 48 insurance companies. By product type, estimated sales in first quarter, 2007 were: indexed - $5.64 billion, book value (1) -- $4.96 billion, market value-adjusted (MVA) -- $1.7 billion, and immediate -- $1.44 billion.
These estimates reflect declines in all product types except MVA annuities, which grew 71.3%. However, estimated sales of these products decreased 21.7% from the prior quarter.
MasterDex, an indexed annuity issued by Allianz Life Insurance Company of North America, (2) was the quarter's top-selling product in the Study for the eleventh consecutive quarter. New York Life's Preferred Fixed Annuity, a book value product, took the number two spot for the second time in a row. This product has been among the top five for 13 quarters straight. Flex 5 & 7, a book value annuity issued by AIG Annuity Insurance Company (NYSE:AIG), was the quarter's third bestseller. Indexed annuities issued by Aviva companies (LSE:AV) joined the first quarter top five, with MultiChoice Income Plus number four and Income Select Plus in fifth place.* First quarter results include sales of some 272 products.
Rank Company Name Product Name Product Type 1 Allianz MasterDex Indexed 2 New York Life Preferred Fixed Annuity Book Value 3 AIG Annuity Flex 5 & 7 Book Value 4 Aviva MultiChoice Income Plus* Indexed 5 Aviva Income Select Plus* Indexed
Of these top five products, three also led sales in a distribution channel: The Allianz MasterDex continued to be the top product among independent producers. New York Life's Preferred Fixed Annuity was again the best seller among captive agents. In banks and S&Ls, AIG Annuity's Flex 5 & 7 was the sales leader for the second consecutive quarter. GPA Plus, a book value product issued by John Hancock (TSX:MFC), retained its number one status in the independent broker-dealer channel. (3) Among large/regional broker-dealers, the top product was Protective Life's (NYSE:PL) ProSaver(r) Platinum, an MVA annuity. Another MVA product, Hartford Life's (NYSE:HIG) CRC, led wirehouse sales. (4)
(1) 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.
(2) Allianz Life Insurance Company of North America is a subsidiary of
Allianz AG (NYSE:AZ).
* MultiChoice Income Plus is issued by AmerUs Life Insurance
Company and Income Select Plus is issued by American Investors
Life Insurance Company. These are Aviva USA companies.
(3) 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.
(4) Number of products for which sales were reported per channel:
Banks and S&Ls -- 84; Captive Agents -- 94; Independent Producers
-- 137; Independent Broker-Dealers -- 55; Large/Regional
Broker-Dealers -- 31; Wirehouses -- 17.
Channel Company Product Product Type
Banks and S&Ls AIG Annuity Flex 5 & 7 Book Value
Captive Agents New York Life Preferred Fixed Book Value
Annuity
Independent
Producers Allianz MasterDex Indexed
Independent Broker-
Dealers John Hancock GPA Plus Book Value
Large/Regional
Broker-Dealers Protective Life ProSaver(r) MVA
Platinum
Wirehouses Hartford Life CRC MVA
By product type, Hartford's CRC was the top-selling MVA annuity and New York Life had the leading immediate annuity for the fourth consecutive quarter.
Continuing fourth quarter's trend, there was another significant shift toward shorter MVA rate terms, with one-year interest guarantee periods (IGPs) accounting for more than half of sales for the first time in three years. Results were somewhat different for book value products. IGPs of three years or less accounted for 92.5% of sales (up from 89.5% in the prior quarter). But there was a strong shift from one- to three-year IGPs.
"Yield curve inversion continued to put declared rate fixed annuities at a competitive rate disadvantage, and had the predictable negative impact on sales. Book value and MVA products posted big declines for the second consecutive quarter. Conditions were somewhat more favorable for indexed annuities and quarter-on-quarter sales were flat," said Jeremy Alexander, CEO of Beacon Research. "The outlook for second quarter is more promising. The yield curve has continued to improve since the end of March and is now in the best shape since June 2006. Importantly, the improvement is due to higher long term rates. This should help boost sales of fixed annuities all types."
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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