According to a new report from the Insured Retirement Institute (IRI), there was a 10.3 percent increase in new variable annuity sales in 2010.
New sales in the year totaled $136.6 billion, compared to $123.9 billion in 2009. With total assets at an all-time high of $1.5 trillion, IRI reports that the variable annuity industry has surpassed the pre-crisis level of the third quarter of 2007.
Variable annuity contract costs have remained steady over the past five years when measured as industry averages. Total average expenses in 2006 were 2.51, compared to the 2010 fourth quarter average of 2.49. Carriers moderated their product innovation efforts, with new benefit designs sticking to tried and true step up methods, and withdrawal percentages staying in the 5 percent range.
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"The growth in new sales clearly demonstrates that consumers increasingly recognize the unique value only an annuity can bring to a well balanced portfolio," said IRI President and CEO Cathy Weatherford in a statement. "The industry is in an upward trajectory, one that directly benefits consumers through product innovation and generous benefits, without an increase in contract costs. While this is an early snapshot on what 2011 may bring, I am confident that shift toward richer benefits will continue throughout the year."
Overall, carriers filed 49 changes in the first quarter, compared to 64 in the previous quarter. Living benefit rider activity continued at a strong pace. The lifetime GMWB continues to be the living benefit of choice among product developers and those distributing VAs. All 13 living benefits released in Q1 2011 were designed as lifetime withdrawal riders.
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