Variable annuities continued to surge in the second quarter of this year, with total sales reaching $40.9 billion, an increase of 16% over the same period last year, according to LIMRA, the Windsor, CT-based financial services research firm.

That pace slightly bested the $39.8 billion in sales recorded in the first quarter and brought the total sales of variable products for the first half of 2011 to $80.7 billion -- 20% higher than sales during the first half of 2010.

The second quarter gain marks the fifth straight quarter that variable annuity sales have increased.

Joseph Montminy, assistant vice president for annuity research at LIMRA, said the recent period of equity market volatility which began in earnest in late July is bound to negatively impact sales of variable annuities, but he said “Consumer demand for guaranteed income protection will continue to drive sales of VAs with guaranteed living benefit (GLB) riders.”

He noted that 87% of the variable annuities sold in the second quarter carried GLB riders.

Total annuity sales also improved compared to last year, hitting $62.4 billion in the second quarter, an increase of 9%, and totaled $122.4 billion through June 30, up 13% over the first six months of 2010.

Fixed annuity sales stumbled a bit this year, which Montminy said was understandable given the current extremely low interest rate environment.

Nonetheless, while the $21.5 billion in fixed annuity sales for the second quarter represented a 1% decline from the same period a year ago, it was 6% higher than the sales figure for the first quarter of 2011, when $20.1 billion worth of fixed annuities were sold. For the first six months of this year, total fixed annuities sales reached nearly $41.7 billion.

Also doing well in the second quarter were immediate annuities. The $2.2 billion sales figure was up a whopping 22% over the prior quarter, and up 5% on the prior year’s second quarter.

Not quite so good were indexed annuities. While second quarter sales of $8.1 billion marked a 14% gain over the prior quarter, it was a decline of 1% from the year-ago second quarter sales figure.

For the second quarter, the top selling annuity issuer was Met Life, with total sales of $13.6 billion, of which $12.6 billion represented variable products. Prudential Annuities, with total sales of $11.9 billion, ($11.3 billion variable) checked in second. The third-ranked issuer was Jackson National with total annuities sales of $10.6 billion and variable sales of $9.5 billion.