Total annuity sales fell almost 7% from the fourth quarter 2009 to the first quarter of this year, from $50.9 billion to $47.4 billion, according to a new report by the
If that doesn’t sound like much of a decline, bear in mind that year-over-year annuity sales are down a full 27%, from $64.4 in the first quarter 2009.
Fixed annuities proved to be the real drag, with sales falling 14.7% from $19 billion to $16 billion. FA sales are down a whopping 51.9% from a year earlier, when sales stood at $34 billion.
Jeremy Alexander, president and CEO of
“Things will get brighter for fixed annuities,” he says. “We just have to wait and see how this year shakes out.”
Variable annuity sales only dropped by 1.5%, from $31.9 billion to $31.4 billion in the first quarter. Year-over-year sales of VAs were actually up by 3%, from $30.4 billion.
“More confidence out there means more people will spread across variable options rather than at fixed rates,” says Marco Chmura, team leader for
But while market enthusiasm spared VAs from too far a tumble, Chmura notes that higher fees, fewer benefits and restrictions on how aggressive investors can be, prevented VA sales from experiencing the spike that mutual funds enjoyed.