EVANSTON, Ill., May 30, 2008 (PRIME NEWSWIRE) -- U.S. sales of fixed annuities were an estimated $18.8 billion in first quarter, 2008 according to new data from the Beacon Research Fixed Annuity Premium Study based on sales of 49 insurance companies representing an estimated 86% of the market(1). Overall sales were 35.2% above those of first quarter, 2007 and up 7.2% from the previous quarter.
By product type, estimated sales in first quarter, 2008 were: book value(2) -- $9.0 billion; indexed -- $5.7 billion; market value-adjusted (MVA) -- $2.3 billion, and; immediate -- $1.8 billion. These estimates reflect increases from the first quarter, 2007 in all product types except indexed annuities (down 0.8%). Book value sales grew 73.7%. MVAs and immediates were up 42.5% and 32.4%, respectively. From the prior quarter, there also was sales growth in book value annuities (24.9%) and MVAs (11.5%). But indexed sales dropped 10.5%, and immediates were down 4.9%.
AIG Annuity regained overall sales leadership among Study participants. First quarter results for the top ten Study participants were as follows:
Total Fixed Annuity Sales
(in thousands)
-------------------------
AIG Annuity Insurance Co. (NYSE:AIG) 2,722,826
New York Life 1,411,591
Aviva USA(3) 1,282,078
Allianz Life(4) 1,143,565
Principal Financial Group (NYSE:PFG) 766,031
Allstate Financial (NYSE:ALL) 656,105
American National (Nasdaq:ANAT) 585,000
Jackson National Life 584,428
Genworth Financial Companies 569,028
Protective Life (NYSE:PL) 560,876
First quarter's five best-selling products were issued by four of these companies. A proprietary book value product issued by AIG Annuity took top honors for the first time, followed by two more annuities of this type. New York Life's Preferred Fixed Annuity moved up one place to come in second, with AIG Annuity's Flex 5 in third place. American National's Palladium MYG was the top five's only MVA, joining in fourth place. MultiChoice Income Plus, issued by an Aviva USA company, came in fifth once again. It was the only indexed annuity in first quarter's top five. First quarter results include sales of some 380 products(5).
Rank Company Name Product Name Product Type 1 AIG Annuity Proprietary Bank Product C Book Value 2 New York Life NYL Preferred Fixed Annuity Book Value 3 AIG Annuity Flex 5 Book Value 4 American National Palladium MYG MVA 5 Aviva USA MultiChoice Income Plus Indexed
In terms of distribution channel sales, the new year brought a new group of leading products with one exception. Three of the top five products were also distribution channel bestsellers. AIG Annuity's proprietary product was the bank channel leader. American National's Palladium MYG led independent broker-dealer sales. Among independent producers, Aviva USA's MultiChoice Income Plus was the bestseller. New York Life's NYL Optimal Fixed Annuity took the top spot among captive agents (replacing the company's NYL Preferred Fixed Annuity). Protective Life took back leadership in the large/regional broker-dealer channel with ProSaver Platinum(r), an MVA annuity. Another MVA, Allstate Financial's ChoiceRate Annuity, continued as the top wirehouse product -- the only repeat performance of the quarter.
Channel Company Product Product Type
Banks and S&Ls AIG Annuity Proprietary Bank Book Value
Product C
Captive Agents New York Life NYL Optimal Fixed Book Value
Annuity
Independent American National Palladium MYG MVA
Broker-Dealers
Independent Aviva USA MultiChoice Income Indexed
Producers Plus
Large/Regional Protective Life ProSaver Platinum MVA
Broker-Dealers
Wirehouses Allstate Financial ChoiceRate Annuity MVA
MVA sales shifted toward longer rate terms once again in first quarter, 2008. Interest guarantee periods (IGPs) of seven years or more accounted for 45.5% of sales, up from 40.2% in the prior quarter. Book value sales mainly shifted from the one-year to the three-year IGP.
"First quarter's sales growth was driven primarily by book value annuity sales in banks," said Jeremy Alexander, CEO of Beacon Research. "The spread between one- and ten-year Treasuries increased dramatically. By March, it was the widest since September, 2004. This gave fixed annuities a rate advantage over bank certificates of deposit, because insurance companies make longer-term investments to back annuities with shorter rate terms. Indexed sales held up surprisingly well, despite first quarter's volatile and depressed equities markets and low caps on credited rates. Aggressively promoted guaranteed living withdrawal benefits and bonuses helped to keep results essentially flat compared to first quarter, 2007. We expect more overall growth in second quarter. However, indexed products may have trouble competing with fixed rate annuities if rates continue to rise."
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.
The Beacon Research logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=509
(1) Sales figures 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.