Western National #1 in 4Q Fixed Annuity Sales

U.S. sales of fixed annuities were an estimated $19.6 billion in fourth quarter 2009, according to data from the Beacon Research Fixed Annuity Premium Study. Structured settlements are not included in that figure.

Western National Life, an AIG company, vaulted from sixth place to become fourth quarter’s sales leader, bumping New York Life to second place. Western National also led in book value sales, replacing Pacific Life. Allianz dropped down a notch to come in third.

By product type, American National took top market value-adjusted (MVA) sales honors from ING USA. Allianz remained number one in indexed annuities, and New York Life continued as the dominant issuer of fixed income (immediate and deferred) products.

Jeremy Alexander, CEO of Beacon Research, said that fourth quarter’s fixed annuity rate trends resembled those of the prior quarter.

“These rates continued to decline. Only a few one-year renewal rates were crediting at the threshold 5% level. Both book and MVA annuities again moved to shorter initial interest guarantee periods. As was the case in third quarter, most annuity buyers probably didn’t want to lock in low rates for more than a few years,” he said in a release.

“We expect first quarter sales to post a sequential increase,” Alexander continued. “Fixed annuity rates are somewhat higher and there’s been stepped-up promotional activity of all four fixed annuity product types. Though consumer demand should remain strong, further growth will depend on the interest rate environment and the availability of investment grade bonds to back new business.”

Fourth quarter 2009 sales were down 43% and 11% compared to fourth quarter 2008 and third quarter 2009, respectively. In calendar year 2009, total market sales were an estimated $104.3 billion, 2% below 2008.

By product type, estimated sales in fourth quarter 2009 and for all of 2009 were:

Results were behind the near-record levels of fourth quarter 2008. MVAs (whose surrender values vary, depending on prevailing interest rates) dropped 76%, book value annuities fell 47%, income annuities fell 17%, and indexed annuities declined 4%.

Compared to the third quarter of 2009, income annuities posted a small 1% increase. Estimated sales shrank for the other product types: MVA, -39%; book value, -9%; indexed, -6%. The indexed share of sales rose to an eight-quarter high of 35%, but book value annuities remained the dominant product type with a 46% share.

Compared to 2008, indexed annuity results advanced 11%. MVAs were 16% behind. Income annuities fell 7%, and book value products dropped 3%.

Sales by product
The Allianz MasterDex X, the only indexed annuity among the top five sellers, moved from second place to become fourth quarter’s best-selling product. All the others were book value products.

Pacific Life’s Pacific Explorer, last quarter’s leader, came in second. New York Life rejoined the top five with its NYL Select 5 Fixed Annuity in third place. Two Western National annuities – Flex 5 and a proprietary bank product – came in fourth and fifth, respectively. Fourth quarter results include sales of more than 400 products (excluding immediate annuities).

Sales by channel
Three of the top five annuities were also distribution channel leaders. Pacific Explorer became the new independent broker-dealer sales leader and continued as the top bank and wirehouse product. MasterDex X remained number one among independent producers. The New York Life Optimal Fixed Annuity (a book value product) was the new captive agent bestseller.

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