Sales of annuities fell 7% year over year in the second quarter, dragged down by fixed annuities even as variable annuities rose 11%, according to data from Limra.
Among key channels, independent financial advisers sold $11.8 billion of annuities, covering both fixed and variable, down 5% year over year.
Wire-house advisers sold $7.3 billion worth, a 5% year-over-year increase, and bank reps sold $8.9 billion of annuities, down 27%.
The bank channel's sales of fixed annuities fell 46%. Across all channels, fixed annuity sales fell 26% in the second quarter. But Joe Montminy, who heads Limra's individual annuity research, notes the products were selling in record numbers at the beginning of 2009.
While this year's fixed annuity sales can't match that, total second-quarter sales rose 13% compared with the first quarter, and sales will likely range from $19 billion to $22 billion per quarter the rest of the year.
Banks and independent insurance agents still sell the bulk of fixed annuities. In the second quarter, banks sold $4.8 billion and independent insurance agents sold $8.6 billion of the total $21.5 billion of fixed annuity sales.
By comparison, wire houses sold $1 billion of fixed annuities and independent financial advisers sold $1.5 billion.
"Banks have always been strong in book-value-type products, while independents sell more indexed annuities, which are experiencing record sales," Montminy said.
Indexed annuities, which typically sell to fixed-annuity clients who want a little exposure to market upside but are too risk-averse for variable annuities, sell well in a specific market.
Right now, with interest rates so low, indexed annuities are an attractive alternative to fixed annuities.
However, Montminy said, while independent insurance agents represent 85% of all sales of indexed annuities, the products themselves are a small piece — approximately 5% to 7% — of the annuity universe.
Independent financial advisers sold the most variable annuities ($10.3 billion), followed by career insurance agents ($8.4 billion), wire houses ($6.3 billion) and then banks ($4.1 billion).
"Independents have really picked up market share in the past year or two," Montminy said.
He attributed this to rocky market conditions, which had investors scurrying for guarantees, and to turmoil in the wire-house channel, which has boosted salesperson head counts at the independents.
About 87% of clients who were advised to buy a variable annuity eventually bought one. That was roughly the same percentage as in the first quarter.
Second-quarter variable annuity sales reached a two-year high of $35.5 billion.
Montminy said that is partly because the retirement-income conversation is becoming more prevalent both on Main Street and on Capitol Hill.
In the first half of the year variable annuity sales were strong across the board. Seventeen of the top 20 sellers of annuities posted gains. The top five sellers across all channels are Prudential ($11 billion in sales), MetLife ($9.8 billion), Jackson National ($8.4 billion), TIAA-CREF ($7 billion) and American International Group ($6.5 billion).
