AnnuitySpecs.com said in its third quarter report that the sale of indexed annuities (IA) reach $8.7 billion, 5 percent higher than the prior quarter. The increase in IA sales parallels the increase in variable annuity (VA) sales. IA sales for the same period in 2010 fell 1 percent.
IA, a type of annuity purchased from insurance companies that provides returns based on investment based index, accounted for half of all fixed annuity sales, according to Sheryl J. Moore, president and CEO of AnnuitySpecs.com. Moore said the third quarter 2011 ranked as the second highest quarter for IA sales to date. AnnuitySpecs.com is based in Des Moines, Iowa.
Moore said that VA sales tanked when the market first crashed in 2008 but now that the market is recovering, VA are becoming more popular, and IA’s are also gaining traction. Moore said usually during such a financial crisis both fixed annuities and indexed annuities will see their sales drop, but this time, the sale of indexed annuities did not decline, while fixed annuity sales did.
Moore explained: “The main reason being that there are a lot of product innovations in this market right now that are providing guaranteed lifetime income that the purchaser cannot live without having to annualize. That has become a strong value proposition as well.”
Allianz Life had a 17 percent market share of IA in the third quarter, maintaining its number one position, followed by Aviva with American Equity, Great American, and Lincoln National.
The sale of IA life rose an even more dramatic 20pc in the third quarter, compared to the prior quarter, and a whopping 50 percent compared to the same period last year. Third quarter IA sales were $251.1 million.
