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Indexed and Income Annuities Set Sales Records in 2012, Beacon Reports

Beacon Research

EVANSTON, Ill., March 27, 2013 (GLOBE NEWSWIRE) -- Indexed and income annuity sales rose to record highs in 2012, according to the Beacon Research Fixed Annuity Premium Study.Indexed annuity results increased 3.7% to $34.2 billion. In the third straight year of growth, income annuity sales advanced 8.5% to $9.2 billion. Fourth quarter's income annuity results of $2.4 billion were up 7.2% from a year ago and 0.3% from the prior quarter. It was the third consecutive quarterly improvement. Deferred income annuities generated the entire sequential gain. Indexed annuity sales were $8.5 billion in fourth quarter, 1.2% above a year ago but 3.2% below the prior quarter.

"DIA results topped $1 billion for the first time in 2012," said Jeremy Alexander, CEO of Beacon Research. "From first to fourth quarter, sales climbed nearly 150%. These products often generate more retirement income than other annuity alternatives and are easy to understand. It's not surprising that growth was so rapid. The need for retirement income was also an important driver of the annual increase in indexed annuity sales."

Total fixed annuity results were $16.2 billion in fourth quarter, down 6.5% from a year ago and 2.2% sequentially. Annual sales fell 11.6% to $66.8 billion. Large losses in fixed rate annuity sales were responsible for the annual decrease. Most issuers of these products chose to maximize margins at the expense of sales.

Estimated Fixed Annuity Sales by Product Type (in $ millions)
Total Indexed Income Fixed Rate
Non-MVA
Fixed Rate
MVA
Q4 '12 16,200 8,452 2,381 4,369 999
Q3 '12 16,570 8,735 2,374 4,434 1,026
% change -2.2% -3.2% 0.3% -1.5% -2.6%
Q4 '12 16,200 8,452 2,381 4,369 999
Q4 '11 17,330 8,352 2,221 5,409 1,346
% change -6.5% 1.2% 7.2% -19.2% -25.8%
YTD 2012 66,810 34,198 9,197 18,840 4,584
YTD 2011 75,570 32,978 8,481 28,117 5,996
% change -11.6% 3.7% 8.5% -33.0% -23.6%

Allianz was the top fixed annuity company in 2012, followed by New York Life, Aviva, American Equity and Security Benefit Life, a first-time annual top five company. In fourth quarter, Security Benefit Life moved up from fourth place to take the lead for the first time. Allianz moved down a notch to come in second. New York Life remained #3. American Equity moved up a notch to come in fourth, and Lincoln Financial Group rejoined the top five in fifth place. Fourth quarter results for the top five Study participants were as follows:

Total Fixed Annuity Sales (in $ thousands)
Security Benefit Life 1,398,773
Allianz Life 1,247,064
New York Life 1,122,196
American Equity 1,068,853
Lincoln Financial Group 908,694

In fourth quarter, Security Benefit Life jumped from 14th place to take the lead in bank channel sales. Jackson National regained #1 status in the independent broker-dealer channel. Lincoln Financial Group was the new leader in fixed rate non-MVAs. The other top companies in sales by product type and distribution channel were unchanged from the prior quarter.

In sales by product type, Security Benefit Life joined the top five, with its indexed Total Value Annuity taking fifth place. New York Life's Lifetime Income Annuity was the quarterly bestseller, as it had been throughout 2012. Indexed annuities from Allianz and American Equity remained top products, with the Allianz Endurance Plus rejoining the top five in third place.

Rank Company Name Product Name Product Type
1 New York Life NYL Lifetime Income Annuity Income
2 American Equity Bonus Gold Indexed
3 Allianz Life Endurance Plus Indexed
4 Security Benefit Life Total Value Annuity Indexed
5 Allianz Life MasterDex X Indexed

"We think that 2013 will be another record year for indexed and income annuities," Alexander concluded. "But we don't expect overall fixed annuity sales to change significantly."

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.

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

Source:Beacon Research