Variable annuity assets in the U.S. reached an all-time record of $1.5 trillion in 2010, with fourth-quarter sales rises 18% year-over-year to $37.6 billion, the Insured Retirement Institute announced Monday.

“The annuity industry ended 2010 on strong and secure footing, with fourth quarter sales reaching the highest levels of the entire year,” said IRI President and CEO Cathy Weatherford. “Variable annuity assets reached record levels, definitely demonstrating to consumers the value and significance that this investment can play in their overall retirement savings strategy.”

Sales of both variable and fixed annuities were $54.3 billion in the fourth quarter, up 5.7% from the $51.3 billion of sales in the fourth quarter of 2009.

Despite the strong performance of variable annuity sales in 2010, industry-wide sales dropped to $09 billion compared to 2009 sales of $229 billion. This was due to the fact that fixed annuity sales dropped by 31.2% to $71.7 billion, compared to $104.2 billion in 2009.

Fixed annuity sales in the fourth quarter were $16.7 billion, down 14.3% from $19.5 billion in sales in the fourth quarter of 2009.

“It appears that sales of fixed annuities fell relative to fourth quarter 2009 due to future interest rate expectations,” said Beacon Research President and CEO Jeremy Alexander. “Unlike a year-ago quarter, rates were rising in fourth quarter 2010. This created a disincentive to lock in available fixed annuity rates.”