The annuities industry posted a solid second quarter, according to the Insured Retirement Institute (IRI).
The IRI, an organization that tracks annuities and the retirement planning space, culls together and analyzes variable annuities data from Morningstar Inc. and fixed annuities data from Beacon Research. IRI reports that variable annuity sales posted record highs during the quarter, with year-over-year sales showing the biggest percentage increase since 2007. On the fixed annuity side, estimated sales of both indexed and income annuities did well during the quarter.
An IRI spokesperson said that companies often revise their final sales numbers, but that the estimated numbers are always very close to the final tallies.
Variable annuity sales for the second quarter were $34.4 billion, a 9% gain over the first quarter and an 8.2% increase over the year-earlier quarter. Sales of variable annuities had been in decline from fourth quarter 2007 through this year's first quarter, the spokesperson said.
"While [variable annuity] products may be offering less lucrative benefits than in the past, investors are still attracted to the idea of creating a floor against losses," said Morningstar VA Data Operations Manager Marco Chmura.
Fixed annuity sales for the second quarter were $19.4 billion, a 17.7% increase over the first quarter.
Beacon Research President and CEO Jeremy Alexander said sales of fixed annuities improved quarter-to-quarter for various reasons. For starters, even though rates were falling, the spread between Treasury and corporate bond yields widened--enabling fixed annuities to offer competitive credit rates. In addition, buyers apparently got tired of waiting for rates to rise.
"Those reluctant to lock in the quarter's low rates purchased indexed annuities, which offered upside potential, downside protection and attractive guaranteed lifetime income," he said.
That said, year-over-year quarterly sales of fixed annuities were down 30.2%, declining from $27.8 billion in the second quarter of 2009.
In toto, annuity sales in the second quarter represent a mixed bag in terms of comparisons. Aggregate sales were $53.8 billion, a 13.5% increase versus the first quarter but a 9.8% drop compared to the year-earlier quarter.