The variable annuity industry paused in this year's first quarter, with fewer product changes and further consolidation in the space.
According to a report from Morningstar Inc., there were 49 significant product changes filed by variable annuity carriers in the first quarter. That's down from 69 changes from the prior quarter, and significantly off the pace of 140 changes filed in first quarter 2010.
Morningstar analyst John McCarthy noted that carriers moderated their product innovation efforts, with benefit designs sticking to proven methods and withdrawal percentage rates keeping in the 5% range.
Meanwhile, the industry consolidated a bit during the quarter after Genworth said it will exit the variable annuity business.
That said, variable annuities had a solid 2010. New sales jumped 10.3%, and assets hit an all-time high of $1.5 trillion, which surpassed the pre-crisis level of third quarter 2007.
McCarthy said signs indicate a pick up in both product development and more generous benefits during the rest of 2011.