Variable annuity sales through banks stumbled in the third quarter, hit by the stock market's plunge.

At $2.8 billion, sales were down 12.5% from the previous quarter, according to a quarterly report by Kenneth Kehrer, a Princeton, N.J., consultant.

"You'd expect market volatility to effect annuity sales along with mutual fund sales and that clearly happened," Mr. Kehrer said.

Offsetting the falloff in variable annuities sales was an uptick in fixed annuity sales, the first in five quarters. Banks sold $2.2 billion of fixed annuities, up 15.7%.

The majority of the increase came from First Union, which offered an 8% first-year rate on a fixed annuity underwritten by American General Life Cos., Houston.

"It came at the right time-investors were looking for something safe," Mr. Kehrer said.

As a result, total bank annuity sales fell just 2%, to $5 billion, according to Mr. Kehrer.

Though First Union's bonus-rate product whetted customers' appetites, traditional fixed annuities remained less attractive than CDs, which paid about a percentage point better in the third quarter, Mr. Kehrer said.

On the strength of First Union's sales of its fixed annuity, American General climbed from third place to second in overall annuity sales through banks, with sales of $589 million, up $287 million from the second quarter.

Sales by Hartford, which set a bank annuity sales record of $1.1 billion in the second quarter, dropped 16%, to $925 million, in the third quarter- roughly in line with the market-but held onto the top spot. Nationwide dropped from second to third.

Nationwide's sales were $487 million for the quarter, down 28.7% from $643 million in the second quarter but in line with its first-quarter sales.

"This was kind of a setback quarter for them," Mr. Kehrer said.

Nationwide's variable annuities were more heavily in fixed investments, which made rates less competitive for the quarter, he said. Because Nationwide's sales are traditionally balanced between fixed and variable, Mr. Kehrer said, he expects the company to rebound from this quarter.

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