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Record-High Market Shares for Indexed and Income Annuties in Q3 '12, Beacon Reports

Beacon Research

EVANSTON, Ill., Dec. 4, 2012 (GLOBE NEWSWIRE) -- Indexed annuities claimed 53% of third quarter's fixed annuity sales, according to the Beacon Research Fixed Annuity Premium Study. Income annuities had a 14% share. Both were record highs. At $2.4 billion, income annuities also had their strongest quarter ever, with deferred income annuities (DIAs) generating 77% of the $87 million quarter-to-quarter increase. Indexed annuities had their third-best quarter. Sales of $8.7 billion were up 0.5% year over year, though down 1% sequentially. On a year-to-date basis, both product types had record-high results: indexed - $25.7 billion (up 4.5%); income - $6.8 billion (up 9%).

"Indexed and income annuity market shares grew because their value propositions were attractive relative to the conservative alternatives in third quarter's low interest rate, uncertain economy," said Jeremy Alexander, CEO of Beacon Research. "They also became more dominant because fixed rate annuity sales declined so significantly. Many carriers focused on the profitability of their fixed rate annuity product lines at the expense of sales."

Total fixed annuity results were $16.6 billion in third quarter 2012, down 13% from a year ago and 3% from the prior quarter. Year-to-date sales fell 13% to $50.6 billion. Quarterly and YTD results were lower due to large decreases in fixed rate annuity sales.

Estimated Fixed Annuity Sales by Product Type (in $ millions)
Total Indexed Income Fixed Rate
Non-MVA
Fixed Rate
MVA
Q3 '12 16,570 8,735 2,374 4,434 1,025
Q2 '12 17,100 8,845 2,287 4,783 1,191
% change -3.1% -1.2% 3.8% -7.3% -13.9%
Q3 '12 16,570 8,735 2,374 4,434 1,025
Q3 '11 19,000 8,690 2,226 6,627 1,460
% change -12.8% 0.5% 6.7% -33.1% -29.8%
YTD 2012 50,610 25,746 6,816 14,471 3,585
YTD 2011 58,240 24,626 6,259 22,709 4,650
% change -13.1% 4.5% 8.9% -36.3% -22.9%

In terms of carrier results, Security Benefit Life became a top five company for the first time, joining in fourth place. Aviva USA and New York Life switched places to come in second and third, respectively. American Equity moved down a notch to take fifth place. Allianz continued as the quarter's leading company. Third quarter results for the top five Study participants were as follows:

Total Fixed Annuity Sales (in $ thousands)
Allianz Life 1,312,996
Aviva USA 1,064,137
New York Life 1,060,765
Security Benefit Life 1,034,069
American Equity 982,013

Nationwide took the lead in sales of fixed rate non-MVA annuities, and was also the new leader in the bank and wirehouse channels. Pacific Life became the top fixed annuity issuer among independent broker-dealers. The other leaders in sales by product type and distribution channel were unchanged from the prior quarter.

In sales by product type, Lincoln National rejoined the top five, with its Alliance (fixed rate non-MVA) taking fifth place. New York Life's Lifetime Income Annuity was again the quarter's bestseller. Indexed annuities from Allianz, American Equity and Aviva USA remained top five products. American Equity's Bonus Gold moved up two notches to come in second.

Rank Company Name Product Name Product Type
1 New York Life NYL Lifetime Income Annuity Income
2 American Equity Bonus Gold Indexed
3 Aviva USA Balanced Allocation Annuity 12 Indexed
4 Allianz Life MasterDex X Indexed
5 Lincoln National Alliance Fixed Rate Non-MVA

'We're encouraged to hear that a number of carriers are developing new indexed and income annuity products, and also investing in technology to support their fixed annuity business," Alexander concluded. "But we don't expect much sales growth until the interest rate environment improves."

About the Beacon Research Fixed Annuity Premium Study

The quarterly Study is the first and only source to track and analyze product-level fixed annuity sales on an ongoing basis, and the first to put a decade's worth of historical industry, company and product sales information in an easily-searchable online database at www.annuitymarketstudy.com.

About Beacon Research

Beacon Research tracks fixed, indexed and variable annuity sales, rates and features, and provides web-based systems at www.annuitynexus.com for distributors and insurance companies. Beacon also licenses information and software tools to other platforms. Beacon's fixed annuity benchmark series -- the industry's first -- is available through Ibbotson Associates. Directly and through strategic alliances, Beacon information can be accessed by hundreds of financial institutions and other distributors, as well as thousands of advisors and agents.

The Beacon Research logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=509

CONTACT: Judith Alexander, 847.864.5447, judith@beaconresearch.net

Source:Beacon Research