Despite flat bank sales of fixed annuities industrywide in the third quarter, Keyport Life Insurance Co. of Boston has grown strongly in the bank channel.
For the first time in years Keyport Life's fixed annuity sales are exceeding those of its variable annuities, according to Philip Polkinghorn, president. 
Altogether, Keyport Life sold $343.3 million of fixed annuities through banks in the third quarter - more than triple the $101.8 million it sold the year earlier.
Sales also rose quarter to quarter: Compared with the second quarter, bank sales rose 30%, from $262.3 million. Wire house and retail brokerage sales also rose substantially - 48%, from $72.0 million to $106.5 million.
A substantial part of the reason for the recent rise, Mr. Polkinghorn said, is that in the past year his company's bank clients have been training more platform sales people in the branches to sell some of the simpler investment products. Fixed annuities are easier to explain than variable annuities, so the fit was natural.
"If you are going to sell a variable annuity, you have to be prepared to talk about the investment styles of 31 different money managers," Mr. Polkinghorn said. With a fixed annuity, the rate of return is stable, based on interest rates, which makes the product easier to explain, he said.
Though he has not yet released industrywide third-quarter figures, bank insurance consultant Kenneth Kehrer of Kenneth Kehrer Associates in Princeton, N.J., said that bank fixed annuity sales are flat or down overall, compared with the second quarter. He attributed the flatness to an interest rate environment that is less favorable to fixed annuities than to certificates of deposit.
Fixed annuities are a longer-term instrument than CDs and usually have a rate of return about 100 basis points higher, he said. Since long-term interest rates have flattened but short-term rates have gone up, CDs have narrowed this margin to about 40 basis points. That, along with the ability to buy CDs for a shorter term - three or six months, compared with five years for an annuity - means CDs are currently much more attractive to conservative investors, he said.
Mr. Kehrer also said, "More and more banks are selling fixed annuities through licensed bankers, and the bankers are getting better at it." Most banks get the biggest sales increase during the second year they have dedicated reps in the branches, he said. This was the second year for FleetBoston Financial Corp., which is a Keyport client, so stronger results at Fleet probably contributed a lot to the company's good comparison with last year's third quarter, he said.
