A shift from equity-based to fixed annuities has won American General the top spot in bank annuity sales for the first time.

Sixty-one percent of first-quarter annuity sales through banks were of fixed annuities, according to a survey released Wednesday by Kenneth Kehrer Associates. Fixed annuities outsold variables $4.9 billion to $3.1 billion, the Princeton, N.J., consulting firm said.Fixed annuities made up 53% of the fourth-quarter total, outselling variables at banks by $3.9 billion to $3.5 billion.

“The stock market has a lot to do with the swing,” said Kenneth Kehrer, the president of the consulting firm. “We saw a flight to safety by investors.”

And a flight to American General’s strengths, said Bruce Abrams, the president of American General Annuity Co.

“It’s a competitive business, and finishing No. 1 is huge,” he said. “We’ve been working to get to this level for a long time.”

Sixty percent of the fixed annuities American General sold through banks in the first quarter were proprietary products — annuities whose assets are managed by the bank intermediary, Mr. Abrams said.

Proprietary annuities have “worked wonders for us,” he said. “We’re clearly a fixed-annuity shop … a mass-customization shop. If a bank has a specific need, we’ll bend over backwards to design the fixed annuity that fits what they are looking for. You have to be flexible and dynamic in this industry.”

The unit sold $1.026 billion of fixed annuities and $147 million of variables through banks in the first quarter.

American General Annuity is a division of the Houston-based American General Corp., which American International Group of New York is buying.

By becoming No. 1 in the business, American General toppled Hartford Life Insurance Cos., which had held that rank since 1996.

Hartford Life fell to second overall, with $887 million of annuity sales through banks, ahead of third-place Aegon/Transamerica, with $842 million. (Transamerica Corp. is a unit of Aegon Insurance Group.)

The Simsbury, Conn.-unit of Hartford Financial Services Group stayed comfortably in the lead in variable annuity sales, with $841 million, according to the survey. Aegon sold $136 million of variables.

Bruce Ferris, vice president of investment product sales for Hartford Life, said it kept its variable annuity sales high despite the rough market because banks know the insurer has a successful track record in variables.

“Our hallmark is variable annuities,” he said. “Bank brokers are going back to investment stories they know and trust over time. We have a familiar story.”

Hartford Life’s 75% drop in fixed sales through banks in the first quarter was the biggest percentage drop for any of the 32 insurers included in the survey.

Mr. Ferris said in a May 21 American Banker story that The Hartford’s fixed-annuities sales were “disappointing” because its product was not competitive.

“We are 30 to 40 basis points behind” other companies’ offerings, he said. “This is a rate sell, and we’re willing to look at lower short-term profit margins in order to compete.”

Hartford Life’s goal is to regain the top spot in annuity sales this year, Mr. Ferris said last week. The likelihood of this happening would improve dramatically if the industrywide gap between fixed and variable sales narrows, he added. “Historically, it’s been around 50-50, and that’s where we think it will be.”

Mr. Kehrer said it’s unclear if the 61%-39% split in favor of fixed annuities will change in the second quarter.

“April was still a strong month for fixed annuities,” he said. “In May we’ve had some bubbling in the stock market, but overall it’s still the fixed annuities that are ahead. We’ll see.”

Nationwide Mutual Insurance Co. of Columbus, Ohio, finished fourth in overall annuity sales through banks, with $717 million, followed by Allstate Insurance Co. of Northbrook, Ill., with $585 million.

Both companies had big jumps in fixed annuity sales. Allstate’s rose 44% from the fourth quarter, to $368 million, while Nationwide’s jumped 46%, to $310 million.

“These two companies had five-year guaranteed products,” Mr. Kehrer said. “The five-year product is gaining popularity. With these products the interest rate on the fixed annuity is guaranteed for five years, unlike in the past, when there was only a guaranteed rate for the first year.”

Sales rose at most companies that offered a five-year guaranteed fixed annuity, but dropped for those without the product, he said.

“A five-year product strains capital, because you have to reserve for what you promised the customer,” Mr. Kehrer said. “That’s why some companies have been reluctant to market the five-year product. But it’s becoming clear that if they don’t market the product, their market share will erode further.”

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