New variable annuity sales slipped slightly in the third quarter of 2010, to $33.6 billion from $33.9 billion in the second quarter, but they were still up 9.9% from the $30.6 billion in the third quarter of 2009. New sales were up 7.7% through the first three quarters of 2010 to $98.76 billion from $91.69 billion for the same period in 2009. That is still down 17% from the new sales reported in the first nine months of 2008 ($119 billion).
On the other hand, assets under management increased for the third quarter, buoyed by positive market returns. As of Sept. 30, variable annuity assets totaled $1.43 billion, a 7.5% increase over assets of $1.32 billion as of June 30. Assets in equity accounts, which currently comprise 56% of all variable annuity assets, grew 11.1% from second-quarter assets, in line with the 10.7% increase in the S&P 500 over the same period.
Net flows for the industry continued to trend upward, reporting in at $6.4 billion in the third quarter of 2010, a 2.8% increase over reported flows in the second quarter. This is the highest level since $7.5 billion flowed into variable annuities in the second quarter of 2008. Overall, 2007 was the biggest year for net flows; variable annuities took in $178.8 billion
Prudential was again the biggest retail seller of variable annuities with $5.4 billion in third-quarter sales and a 16% market share. MetLife remained in second place with $4.7 billion in new sales and a 13.9% share of the market. Jackson National and Lincoln Financial ranked No. 3 and No. 4 with 10.9% and 6.6% of the market, respectively. (TIAA-CREF group variable annuity sales are included in total variable annuity sales and account for 10.2% of the total variable annuity market.)
Ameriprise Financial moved into the No. 5 spot with its new RAVA5 series of products, although pre-sales of that product line (prior to its July inception) were included in Q3 sales rather than Q2 sales. Still, the company would have cracked the top five with or without those sales.
Overall, Prudential, MetLife and Jackson National continue to dominate the variable annuity market, particularly within the independent channel. These three carriers accounted for 40% of new variable annuity sales for the first nine months of the year, double their share in 2008. Within the independent channel, they accounted for 57% of new variable annuity sales for the first nine months of the year, up from 31% in 2008.
The top-selling retail product for the fourth straight quarter was Jackson National Perspective II with $1.9 billion in sales, once again setting a new benchmark for the highest quarterly retail sales reported for single contract. Perspective II sales were followed again by Prudential with its Premier Retirement VA B ($1.81 billion) and Prudential Premier Retirement VA L ($1.63 billion); Jackson National Perspective L ($1.23 billion) moved to fourth; and the Prudential Premier Retirement X rounded out the top five.
Frank O'Connor is director of insurance solutions at Morningstar.