Annuity sales through banks rose 7% in February compared with the previous month, and the $3.6 billion of sales was the most since October, a monthly survey reported.

Fixed annuity sales totaled $2.2 billion, up 8%, according to the Kehrer-Jackson National Monthly Bank Annuity Sales Survey, and variable annuity sales were $1.4 billion, up 6%.

Kenneth Kehrer, the president of the Kenneth Kehrer Associates consulting firm in Princeton, N.J., said that the increases are even more significant in light of the fewer selling days in February compared with other months. He also noted an indicator that bank sales volume is shifting away from mutual funds and toward variable annuities.

Kehrer said he has been tracking the commissions that banks earn from variable annuities compared with mutual funds. Though he lacks specific numbers comparing sales volume in the two products, he said commission trends show that more money is going into variable annuities after a long slide during which banks shifted to selling more mutual funds.

The shift was due, in part, to increased regulatory scrutiny, he said. Since banks earn higher commissions on variable annuities, regulators, including the Securities and Exchange Commission, were concerned that bank reps were pushing investors into variables instead of mutual funds; they had asked a lot of questions about why particular investors were sold particular products.

Now, thanks to the guarantees and benefits being offered with variable annuities, investors are choosing them over mutual funds once again.

February's variable sales were up 17% by comparison with a year earlier, the study found. After drifting down last summer and fall, variables have rebounded slightly in recent months.

Despite the improvement from January's sales, overall annuity sales remained 5% lower than in February 2003 and 23% below their high-water mark in March 2003.

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