EVANSTON, Ill., Aug. 22, 2008 (GLOBE NEWSWIRE) -- U.S. sales of fixed annuities were an estimated $24.6 billion in second quarter, 2008 according to new data from the Beacon Research Fixed Annuity Premium Study, based on sales of 50 insurance companies representing an estimated 87% of the market.(1) Overall quarterly sales were 54.1% above those of second quarter, 2007, up 29.7% from the previous quarter, and the highest since the Study began in 2003. On a year-to-date basis, total market sales were an estimated $43.5 billion, 47.3% above first half 2007.
By product type, estimated sales in second quarter, 2008 were: book value(2) -- $12.0 billion; indexed -- $6.9 billion; market value-adjusted (MVA) -- $3.6 billion, and; immediate -- $2.1 billion. These estimates reflect increases from second quarter, 2007 in all product types. Book value sales more than doubled. MVAs and immediates were up 89.2% and 29.5%, respectively. Indexed gains were a more modest 4.5%. From the prior quarter, there was double-digit growth in all product types: MVA -- 54.4%, book value -- 32.5%, indexed -- 20.1%, and immediate -- 15.3%
New York Life claimed overall sales leadership among Study participants. Second quarter results for the top five Study participants were as follows:
Total Fixed Annuity Sales
(in thousands)
-------------------------
New York Life 2,201,491
AIG Annuity Insurance Co. (NYSE:AIG) 2,092,215
Aviva USA(3) 1,670,696
AEGON/Transamerica (NYSE:AEG) 1,313,563
Allianz Life(4) 1,311,816
In terms of sales by product type, New York Life was also the quarter's immediate annuity sales leader. AIG Annuity posted top book value sales. Aviva led in indexed sales, and Allstate Financial (NYSE:ALL) had top MVA results as well as the leading MVA product -- the Allstate ChoiceRate Annuity.
Four of the quarter's top five fixed annuities were book value products. New York Life's NYL Enhanced Fixed Annuity took top honors for the first time, followed by NYL Preferred Fixed Annuity. A proprietary bank product issued by AIG Annuity came in third. AEGON/Transamerica made the top five for the first time with Transamerica Capital Builder 2007 in fourth place. Allianz rejoined with Endurance 15 coming in fifth as the quarter's best-selling indexed annuity. Second quarter results include sales of some 410 products.(5)
Rank Company Name Product Name Product Type
---- ------------ ------------ ------------
1 New York Life NYL Enhanced Fixed Annuity Book Value
2 New York Life NYL Preferred Fixed Book Value
Annuity
3 AIG Annuity Proprietary Bank Product C Book Value
4 AEGON/Transamerica Transamerica Capital Book Value
Builder 2007
5 Allianz Life Endurance 15 Indexed
--------------------------
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.
Two of the top five products were also distribution channel bestsellers. New York Life regained top bank channel honors with its NYL Enhanced Fixed Annuity. Endurance 15 reclaimed bestseller status among independent producers for Allianz Life. The other channel leaders were unchanged from the prior quarter. New York Life's NYL Optimal Fixed Annuity (a book value product) continued to lead captive agent sales. Three MVA annuities remained bestsellers in the broker-dealer channels. American National's Palladium MYG had top independent B-D sales (Nasdaq:ANAT). Among large/regional B-Ds, Protective Life's ProSaver Platinum(r) remained the leading product (NYSE:PL). The Allstate ChoiceRate Annuity led wirehouse sales once again.
Channel Company Product Product Type
------- ------- ------- ------------
Banks and S&Ls New York Life NYL Enhanced Book Value
Fixed Annuity
Captive Agents New York Life NYL Optimal Book Value
Fixed Annuity
Independent American Palladium MYG MVA
Broker-Dealers National
Independent Allianz Life Endurance 15 Indexed
Producers
Large/Regional Protective ProSaver MVA
Broker-Dealers Life Platinum
Wirehouses Allstate ChoiceRate MVA
Financial Annuity
MVA sales changed course and moved toward the rate terms of medium duration in second quarter, 2008. The six-year interest guarantee period (IGP) increased its quarter-to-quarter share to 28.4% from 17.9%, while IGPs of seven years or more lost share. Book value sales also moved toward the middle, with share gains for five- and six-year rate terms and declines in the other IGPs.
"Second quarter's dramatically positive results were more balanced than the prior quarter's," said Jeremy Alexander, CEO of Beacon Research. "Sales of all fixed annuity types increased in all but one minor distribution channel because conditions were favorable. Rates rose over the quarter, and fixed annuity credited rates at or above the important 5% threshold were available. The yield curve flattened but remained positive, giving fixed annuities a rate advantage over other conservative interest-bearing alternatives. Indexed annuity cap rates rose along with immediate annuity payouts. We anticipate more growth in third quarter, but increases are likely to be more modest."
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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