Windsor, CT, November 15th, 2010 – Sales of annuities through banks in September seem to have lost their momentum after hitting a peak for the year in March. According to the Kehrer-Jackson Monthly Bank Annuity Sales Survey, variable sales maintained August’s levels but fixed annuity sales sank, driving total annuity sales down.
Financial institutions sold $2.6 billion of fixed and variable annuities in September. This represents an 8 percent drop for the month and was 17 percent behind the previous September when fixed annuities compensated for stalled variable sales at banks.
Fixed Annuity Sales
Bank-sold fixed annuity production tumbled 17 percent in September, to $1.2 billion, the lowest level since January. Compared to last fall’s rally, fixed annuity premium was 41 percent below that of September 2009.
“This is the first time we’re seeing fixed annuity sales fall below variable in the bank channel in several years.” said Janet Cappelletti, Associate Research Director for Kehrer-LIMRA. “The last time variables outsold fixed annuities at financial institutions was January of 2008.”She continued, “Variable sales in September were flat, but fixed annuities really fell behind.”
According to the Kehrer-LIMRA Bank Fixed Annuity RateWatch, the spread between the yield on five-year CDs and the average effective yield offered by fixed annuities guaranteed for five years is still under water. The difference between the two products fell from 37 basis points in September 2009 to negative 10 points in September 2010. This means that the average yield on five-year guaranteed fixed annuity was 10 basis points below five-year CDs.
“We have seen slight upwards pressure on fixed annuity rates lately”, said Scott Stathis, Managing Director of Kehrer-LIMRA. “It seems investors have returned to the sidelines for now in hopes that a brief wait will provide a few more basis points” he added.
Variable Annuity Sales
Variable annuity sales maintained summer levels into the fall. In September banks sold $1.4 billion in variable annuities, consistent with August. Year-to-year the September 2010 sales represent a 28 percent jump over last September when variable annuity sales at banks lingered at $1.1 billion for much of 2009.
Banks sold $0.88 in fixed annuities for every dollar of variable annuities in September. At the start of the year, this ratio stood at $1.05 to one and continued to rise before spiraling in the third quarter to under a dollar.
Mutual Fund Sales
Mutual fund sales through banks improved in September and accounted for two-thirds of dollars invested in packaged products. September production of $5.3 billion was a 6 percent increase over August and 13 percent higher than the previous September.
Kehrer-LIMRA is the premier provider of research and consulting services on banks as financial services stores. The Kehrer-JacksonSM Monthly Bank Annuity Sales Survey is based on a national sample of banks that have a minimum of $4 billion in assets. The participating institutions account for about one-third of all bank annuity sales.
Note to editors – we are required to include the following information with our articles:
Annuities and life insurance are issued by Jackson National Life Insurance Company (Home Office: Lansing, Michigan). Variable products are distributed by Jackson National Life Distributors LLC. May not be available in all states and state variations may apply. These products have limitations and restrictions. Contact the Company for more information.
The opinions and forecasts expressed may not actually come to pass. This information is subject to change at any time, based on market and other conditions and should not be construed as a recommendation.