EVANSTON, Ill., Sept. 14, 2007 (PRIME NEWSWIRE) -- U.S. sales of fixed annuities were an estimated $16.4 billion in second quarter, 2007 according to new data from the Beacon Research Fixed Annuity Premium Study based on sales of 49 insurance companies representing an estimated 88% of the market. Overall sales were up 20.0% from the previous quarter but 9.2% below second quarter, 2006. On a year-to-date basis, total market sales were an estimated $30.1 billion, down 13.8% from first half, 2006.
By product type, estimated sales in second quarter, 2007 were: indexed - $6.42 billion; book value(1) - $6.19 billion; market value-adjusted (MVA) - $1.98 billion, and; immediate - $1.82 billion. These estimates reflect increases in all product types from the prior quarter. Relative to second quarter, 2006, sales of immediate and indexed annuities were up 23.8% and 1.6%, respectively. Book value products were down 23.3% and MVAs dropped 10.8%.
For the twelfth consecutive quarter, the Study's top-selling product was MasterDex, an indexed annuity issued by Allianz Life Insurance Company of North America(2). Flex 5 & 7, a book value annuity issued by AIG Annuity Insurance Company (NYSE:AIG), moved to second from third place. In the number three spot was New York Life's Preferred Fixed Annuity -- a top five product for 14 successive quarters. Another book value product came in fourth -- Allstate Financial's (NYSE:ALL) Preferred Performance. An indexed annuity issued by an Aviva USA company -- MultiChoice Income Plus -- came in fifth.* Second quarter results include sales of some 239 products(3).
Rank Company Name Product Name Product Type 1 Allianz MasterDex Indexed 2 AIG Annuity Flex 5 & 7 Book Value 3 New York Life Preferred Fixed Annuity Book Value 4 Allstate Financial Preferred Performance Book Value 5 Aviva MultiChoice Income Plus* Indexed
Of these top five products, three also led sales in a distribution channel: The top product among independent producers was again Allianz' MasterDex. In banks and S&Ls, AIG Annuity's Flex 5 & 7 was the sales leader for the third consecutive quarter. This product also was the top seller in the large/regional broker-dealer channel. Among captive agents, New York Life's Preferred Fixed Annuity retained its number one status. GPA Plus, a book value product issued by John Hancock (TSX:MFC), remained the independent broker-dealer channel's top seller(4). Allstate's ChoiceRate (with MVA) led wirehouse sales(5).
(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, an Aviva USA company. Aviva USA is a subsidiary of Aviva plc (LSE:AV).
(3) This total excludes immediate annuities. Beginning with second quarter, 2007, these annuities are analyzed at the product type level because many participants now issue more than one immediate annuity. Prior quarters' product counts included immediate annuities.
(4) 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.
(5) Number of products for which sales were reported per channel: Banks and S&Ls - 68; Captive Agents - 103; Independent Producers - 157; Independent Broker-Dealers - 47; Large/Regional Broker-Dealers - 25; Wirehouses - 11.
Channel Company Product Product Type
Banks and S&Ls AIG Annuity Flex 5 & 7 Book Value
Captive Agents New York Life Preferred Book Value
Fixed Annuity
Independent Producers Allianz MasterDex Indexed
Independent
Broker-Dealers John Hancock GPA Plus Book Value
Large/Regional
Broker-Dealers AIG Annuity Flex 5 & 7 Book Value
Wirehouses Allstate ChoiceRate MVA
Financial
By product type, New York Life led immediate annuity sales for the fifth consecutive quarter and Hartford's (NYSE:HIG) CRC was the top-selling MVA annuity.
Reversing the trend of the last two quarters, second quarter was characterized by a shift toward longer rate terms in both book value and MVA products. The one-year interest guarantee period (IGP) lost a significant share of sales in both product types. Among book value products, there was a shift to rate terms of three to five years. IGPs of five or more years accounted for 52.5% of second quarter's MVA sales, up from 36.5% in first quarter, 2007.
"Second quarter's fixed annuity sales benefited from an improved interest rate environment. The yield curve turned positive, allowing declared rate annuities to offer competitive credited rates. Stock market declines in the second part of first quarter also prompted a move to more conservative fixed annuities, and sales of all product types rose," said Jeremy Alexander, CEO of Beacon Research. "Third quarter's conditions have been similar, suggesting that there will be another quarter-on-quarter increase in fixed annuity 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.