FOR IMMEDIATE RELEASE
Thursday, June 7, 2012
Contact: Danielle Holland
[email protected] or 202.469.3007
Andrew Simonelli
[email protected] or 202.469.3009
Variable Annuity Net Assets Reach All-Time High
Income and Indexed Annuity First-Quarter Sales Experience Year-Over-Year
Growth
Morningstar and Beacon Research Data Show Slight Dip in Quarter-toQuarter Industry-Wide Sales
WASHINGTON, D.C. – The Insured Retirement Institute (IRI) today announced final first quarter 2012
sales results for the United States annuity industry, based on data reported by Morningstar, Inc. and
Beacon Research. Industry-wide first-quarter annuity sales topped $53.1 billion—down slightly more than
2.5 percent from $54.5 billion during the previous quarter.
Variable annuity total sales were down 2.7 percent to $36.2 billion from $37.2 billion in the fourth quarter
of 2011, according to Morningstar. Despite the dip, variable annuity net assets reached an all-time high of
$1.61 trillion during the first quarter of 2012, a 7.2 percent increase from $1.50 trillion during the fourth
quarter of 2011.
“We believe the long-term horizon for the industry looks strong,” said Cathy Weatherford, IRI
President and CEO. “The markets will always experience its ebbs and flows, but at the same time, we
are seeing strength within the fixed annuity market as consumers are turning to income annuities as a
source of lifetime income to attain financial security during retirement. The historic level of variable
annuity net assets shows that insured retirement strategies are, more and more, becoming the savings
vehicle of choice for many consumers.”
Fixed annuity sales for the first quarter dipped 2.2 percent to $16.9 billion from $17.3 billion during the
fourth quarter of 2011, according to Beacon Research. There were about $7.3 billion in qualified sales and
$9.6 billion in non-qualified sales during the first quarter.
Within the fixed annuity market, the income annuity segment continues to experience higher growth as
first-quarter sales rose nearly 23 percent compared with the same period in 2011. Indexed annuity first1101 New York Avenue, NW, Suite 825 · Washington, D.C. 20005 · 202-469-3000 · Fax: 202-469-3030
quarter sales also were higher, with sales up nearly 9 percent compared with the first quarter of 2011.
Market-value adjusted annuity sales increased 1.6 percent to nearly $1.37 billion from fourth-quarter 2011
sales of $1.34 billion.
“Growing demand for guaranteed retirement income helped push income and indexed annuity sales above
year-ago levels,” said Beacon Research President Jeremy Alexander. “Market value adjustments
enabled carriers to credit a higher rate of interest, and that boosted quarter-to-quarter sales of these
products.”
Fixed Table 1. Quarterly Fixed Annuity Sales By Product Type
Quarter Ended
($ Millions)
3/31/2012
12/31/11
9/30/11
6/30/11
3/31/11
16,943
17,330
19,000
20,670
18,570
Book Value
5,253
5,408
6,627
8,286
7,796
Market Value Adjusted
1,368
1,346
1,460
1,663
1,527
Indexed
8,166
8,352
8,690
8,438
7,498
Income
2,156
2,221
2,226
2,280
1,754
Total Sales (Rounded)
Source: Beacon Research Fixed Annuity Premium Study
Fixed Table 2. Quarterly Market Share By Product Type
(As a percent of total sales)
Indexed
3/31/12
48.2
Book Value
31.0
Income
12.7
Market Value Adjusted
8.1
Source: Beacon Research Fixed Annuity Premium Study
According to Morningstar, quarterly net variable annuity sales decreased 34.5 percent year-over-year to
$3.8 billion in the first quarter of 2012 from $5.8 billion during the same period in 2011. There were
$24.3 billion in qualified sales and $11.8 billion in non-qualified sales in the first quarter.
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“While total assets increased more than 7 percent, assets in allocation funds increased slightly more than
13 percent, outpacing the increase in the S&P 500 Index,” said Frank O’Connor, Morningstar Director
of Insurance Solutions. “Growth in the allocation class is highly correlated with growth in the use of
income benefits, because investment in these types of funds is often required when an investor elects a
guaranteed income benefit.”
Variable Table 1. Variable Annuity Net Assets
(Dollars in Millions)
Total Net Assets
3/31/12
1,610,870
12/31/11
1,502,300
9/30/11
1,421,710
6/30/11
1,569,015
Source: Morningstar, Inc.
Variable Table 2. Quarterly Variable Annuity Total Premium & Net Sales1
Quarter Ended
($ Millions)
3/31/12
12/31/11
9/30/11
6/30/11
3/31/11
Total Sales
36,211
37,221
39,119
39,986
39,158
3,823
7,238
8,857
5,740
5,819
10.6%
19.4%
22.6%
14.4%
14.9%
Net Sales
Net Sales as %
of total sales
Source: Morningstar, Inc.
1
Total Premium Sales, also called Total Premium Flows, represents the sum of new sales [all first-time buyers of a contract, including interand intra-company exchanges] and additional premiums from existing contract owners. Net Sales, also called Net Flows, represents Total
Premium Sales minus surrenders, withdrawals, inter- and intra-company exchanges, and benefit payments.
Variable Table 3. Variable Annuity Assets by Asset Class
(As a percent of total assets)
Equity
12/31/11
42.5
Allocation
24.4
Fixed Accounts
20.2
Bonds
10.8
Money Market
2.0
Source: Morningstar, Inc.
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About Morningstar, Inc.: Morningstar, Inc. is a leading provider of independent investment research in
North America, Europe, Australia, and Asia. The company offers an extensive line of products and
services for individuals, financial advisors, and institutions. Morningstar provides data on more than
380,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time
global market data on more than 8 million equities, indexes, futures, options, commodities, and precious
metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment
management services through its investment management subsidiaries and has more than $190 billion in
assets under advisement or management as of March 31, 2012. The company has operations in 27
countries.
About Beacon Research: Beacon Research is an independent research company and application service
provider founded in 1997 and based in Evanston, Ill. Beacon tracks fixed and variable annuity features,
rates and sales. Its quarterly Fixed Annuity Premium Study is the first and only source to analyze fixed
annuity sales at the product level. Beacon lowers compliance risk and increases fixed annuity sales with
100% carrier-approved, comprehensive product profiles, spreadsheets and search tools for the advisor/rep
websites of banks, TPMs, broker-dealers and marketing organizations. Financial institutions use its
systems at www.annuitynexus.com for compliance review of 1035 exchanges, sales support, conservation
and product research. Beacon also licenses information to other platforms, including Insurance
Technologies’ VisibleChoice™ annuity sales platform, Ebix, Lipper, and Ibbotson Associates. Directly
and through strategic alliances, Beacon information can be accessed by hundreds of financial institutions
and thousands of advisors.
About the Insured Retirement Institute: The Insured Retirement Institute (IRI) is a not-for-profit
organization that for twenty years has been a mainstay of service, commitment and collaboration within
the insured retirement industry. Today, IRI is considered to be the authoritative source of all things
pertaining to annuities, insured retirement strategies and retirement planning. IRI proudly leads a national
consumer education coalition of nearly twenty organizations and is the only association that represents the
entire supply chain of insured retirement strategies: our members are the major insurers, asset managers,
broker dealers and more than 150,000 financial professionals. IRI exists to vigorously promote consumer
confidence in the value and viability of insured retirement strategies, bringing together the interests of the
industry, financial advisors and consumers under one umbrella. IRI’s mission is to: encourage industry
adherence to highest ethical principles; promote better understanding of the insured retirement value
proposition; develop and promote best practice standards to improve value delivery; and to advocate
before public policy makers on critical issues affecting insured retirement strategies and the consumers
that rely on their guarantees. Visit www.IRIonline.org today to experience the vast resources of the
Insured Retirement Institute for yourself.
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