Variable Annuity Sales Surge In 3Q; Fixed Sales Fall

The Insured Retirement Institute said third-quarter annuity sales rose to $57 billion in the third quarter, up 5% from the year-ago period. Sales year-to-date were $175.4 billion, up from $163.1 billion in 2010.

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Demand for guaranteed lifetime retirement income in the face of extreme market volatility has driven the uptick in annuity sales, said IRI President and CEO Cathy Weatherford . Annuities are valuable tools for financial advisors as they “help address the adversity clients are feeling toward volatility,” she said.

Sales of variable annuities posted the greatest gain from year-ago levels, jumping to $39.1 billion, a 14% increase from $34.3 billion in the third quarter of 2010. Year-to-date variable annuity sales were $118.1 billion, 17% above the $100.7 billion recorded through the same period in 2010.

Third-quarter sales of fixed annuities, however, dropped to $17.9 billion from $20.5 billion in the third quarter of last year. Year-to-date fixed annuity sales were $57.2 billion, down 2.7% from $58.8 billion in 2010. 

Fixed annuities are “going to have ebbs in growth,” particularly during periods of record-low interest rates as the markets are experiencing today,” Weatherford said. 

While sales of annuities were up overall from a year ago, they were off 6% from the previous quarter. Third-quarter sales of variable annuities fell 2% from $39.9 billion in the second quarter.  Fixed annuities declined 12.3% from $20.4 billion in the second quarter.