Helped by low consumer confidence in the equity markets, fixed annuities easily outsold variable annuities through banks for the second straight quarter in the three months that ended June 30, according to Kenneth Kehrer Associates.

The Princeton, N.J., consulting firm said the gap between fixed and variable annuity sales widened in the three months — 68% of annuities sold through banks were fixed, against 61% in the first quarter. Banks sold $6.1 billion of fixed and $2.8 billion of variable annuities.

Variable annuity sales through banks dropped 9%, and 14 of the top 20 variable annuity providers through banks had lower sales than in the first quarter. Fixed annuity sales were up 25%.

“That’s another pretty good swing” toward fixed annuities, “and whether it closes depends on whether the stock market comes back,” said Kenneth Kehrer, whose firm released its second-quarter findings Thursday.

Fixed annuities “have done well because of a yield curve that favors them over CDs right now,” Mr. Kehrer said, “but they have also benefited since the beginning of the year from the five-year guarantees insurers have put on interest rates.” Variable annuity sales, on the other hand, are ailing.

One of several reasons is that “people are really discouraged” with the stock market, Mr. Kehrer said. “The economy doesn’t seem to be cooperating. Consumer confidence is down, back-to-school retail sales — a leading indicator — are disappointing, and earnings haven’t been good. So the lull could continue.”

The continued shift toward fixed annuities played right into the hands of American General Corp., which sold a total of $1.233 billion of annuities through banks. The lion’s share of that — $1.097 billion — was in fixed annuities.

American General officially became a subsidiary of New York-based American International Group Inc. on Wednesday, when AIG’s $23 billion purchase of the Houston company was approved by the Texas Department of Insurance. “We’ve been truly appreciate our partnership with the banks,” said Bruce Abrams, the president of American General Annuity Co. “Many of our partners are now selling two or three of our annuities.”

Meanwhile, the Dutch insurer Aegon leaped ahead of Hartford Life for the No. 2 spot for both fixed and overall annuity sales through banks in the Kehrer rankings. Aegon, which owns Transamerica Life, sold $816 million of fixed annuities through banks, up 15% from the first quarter. Overall, Aegon had $917 million of annuity sales through banks in the three months.

“We’ve done very well in fixed annuities, so the market has played to our strengths,” said Bill Waldie, the managing director of product development and industry relations at Transamerica Financial Institutions Inc. in Minneapolis, which markets Aegon’s annuities to the bank channel. “But we’re also looking to build our variable annuity business. Fixed is where we cut our teeth. Growing the variable line is tough in this market, but we’re trying.”

Much of Aegon’s success in the bank channel comes from proprietary annuities, which represent 90% of the company’s bank sales, Mr. Waldie said.

“We made this a niche of ours a long time ago and we’re fortunate we did, because it’s what banks want,” he said. “As banks have learned the business, they’ve wanted their own brand and product to push to their customers.”

Aegon has 15 proprietary annuity agreements, 10 of which are on the fixed side.

Mr. Kehrer said proprietary annuities generally lead to higher sales. According to his data, banks that offer a proprietary fixed annuity have 24% higher investment services revenue and twice the profit from investment services than banks that do not offer one.

Also, banks that offer a proprietary fixed annuity have 80% higher fixed annuity sales than banks of the same size that just sell insurers’ shelf products.

Proprietary variable annuities are also gaining steam, Mr. Kehrer said: 33% of all variable annuities sold through banks were proprietary products in 2000, against 19% in 1999. “Proprietary products sell well because the customer has an affinity for the bank, and the annuity has the bank name on it,” Mr. Kehrer said. “They also do well because the bank’s platform staff is attracted to it. It’s the bank’s own product, and they have more confidence in their own products.”

Hartford Life, of Simsbury, Conn., fell to third place in overall annuity sales through banks, mainly because its strengths are on the variable side. The unit of Hartford Financial Services Group sold $832 million of annuities through banks in the second quarter, $756 million of it from variable annuities. Variable sales were down 10% from the first quarter.

Bruce Ferris, vice president of investment product sales at Hartford Life, said in an interview last week that with investor confidence down, it’s difficult to drive variable sales up.

“With this market, variable annuities are going to get the short end of the stick,” he said. “We have to continue to make the case for equities — tell the story that this is actually a buying opportunity.”

Hartford Life is putting more muscle into its fixed annuity sales efforts, by marketing its fixed annuities more heavily to its bank partners and by raising the interest rates credited for its products, Mr. Ferris said. That is starting to pay off — it sold $76 million of fixed annuities through banks in the second quarter, up 65% from the first quarter, according to Mr. Kehrer’s firm.

Nationwide Financial Services Inc., of Columbus, Ohio, and Allstate, of Northbrook, Ill., were fourth and fifth in annuity sales through banks in the second quarter. Nationwide’s total bank sales of annuities were $802 million, and Allstate’s, $618 million.

Nationwide began three years ago to put more emphasis on bank sales of fixed annuities so as to not be so reliant on variable annuities, said Matt Riebel, the president of Nationwide Financial Institution Distributors Agency Inc., a division of Nationwide that distributes annuities and life insurance through banks.

The decision has kept Nationwide’s fixed and variable annuity sales pretty evenly split this year, despite the industrywide slump in variable sales. In the second quarter, Nationwide’s bank sales of fixed annuities were 53% of its total annuity sales. In the first quarter, variable annuities were 57% of its bank annuity sales.

The company with the largest percentage jump in overall annuity sales was Stamford, Conn.-based and General Electric. GE’s second-quarter bank annuity sales soared 90%, to $548 million, primarily because of better fixed sales. It was sixth overall.

“They’re essentially back to where they were in the fourth quarter,” Mr. Kehrer said. “They had a big dip in the first quarter because their interest rates weren’t competitive.”

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