In a Down Year, Four Firms Grow Their VA Sales

Although total variable annuities (VA) premium in 2009 was down 18% from the previous year, according to LIMRA’s U.S. Individual Annuities quarterly sales survey, four major life insurers finished 2009 with a year-over-year increase in variable annuity sales.

The biggest gainers were Prudential Annuities and Jackson National Life, whose sales were up 58% (to $16.11bn) and 55% (to $10bn), respectively. MetLife increased sales by 10% (to $15.4bn) and Sun Life sales went up 60% (to $3.2bn).

VA sales totaled $127 billion for 2009, down from $156 billion in 2008.

The companies don’t have many common elements that might explain their success last year. Prudential and MetLife are both huge, but MetLife sells both fixed and variable annuities while Prudential focuses on variable. Michigan-based Jackson National, a retirement specialist, and Wellesley, Mass.-based Sun Life Financial are both foreign-owned (by Britain’s Prudential plc and Sun Life of Canada, respectively).

“VA sales experienced significant losses from the third quarter of 2008 through first quarter 2009 and while we are seeing VAs slowly recover, the recovery is slower than expected,” said Joe Montminy, assistant vice president and research director for LIMRA’s annuity research.

Montminy attributed the slowdown in 1035 exchanges for the reduction in overall VA sales. The transfer or “exchange” of assets from an existing contract to a new contract is counted as the sale of a variable annuity, and in a normal year such exchanges account for a large percentage of overall sales.

Because the newest products—those issued since the financial crisis—have less generous benefits than older products, contract owners have less incentive than usual to trade their contract for a new one.

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