The Insured Retirement Institute announced first-quarter variable annuity assets reached $1.6 trillion, the highest level ever recorded by Morningstar.
According to IRI, annuity sales for the first quarter posted a double digit increase over sales from the same time period last year. Industry wide sales were $58.1 billion, up 17 percent from $49.7 billion in the first quarter of 2010.
First quarter sales also garnered quarter-to-quarter growth, increasing at a rate of 5 percent over $55.2 billion from the fourth quarter of 2010.
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"With the first wave of the 79 million Baby Boomers turning 65 this year, guaranteed retirement income strategies clearly are being relied upon in growing numbers," said IRI president and CEO Cathy Weatherford. "Recent IRI research shows that 92 percent of Boomers who own annuities have a higher confidence in the financial stability of their retirement compared to those who do not. The first quarter data shows that the peace of mind that only annuities can bring to a holistic portfolio is being increasingly recognized by those most in need of guaranteed retirement income – a trend that we expect to continue throughout the year."
Fixed annuity sales for the first quarter were $18.9 billion, up from $17.6 billion in the previous quarter, representing a 7 percent increase. Year-to-year quarterly sales of fixed annuities were up 6 percent, increasing from $17.9 billion in the first quarter of 2010.
"Fixed rate deferred annuity sales benefitted from a large bank channel increase by one carrier in particular," said Beacon President and CEO Jeremy Alexander. "The quarter to quarter decline in income annuities was mainly seasonal. Indexed annuities may have lost sales to variable annuities, because VAs have more upside potential in a rising stock market. We think second quarter results may be strong as well. But falling rates may dampen sales going forward."
Variable annuity sales for the first quarter were $39.2 billion, up 4 percent from $37.6 billion in the previous quarter. Year-to-year quarterly sales of variable annuities were up significantly, posting a 23 percent increase from first quarter 2010 sales of $31.8 billion. First quarter 2010 net sales were $5.8 billion. There were $26.2 billion in qualified sales and $13 billion in non-qualified in the first quarter.
"The upticks in both sales and net cash flow suggest growing momentum in variable annuity usage as Advisors continue to become more educated about the unique benefits of variable annuities and grow increasingly comfortable with them as an important component of a sustainable income producing portfolio," said Morningstar Director of Insurance Solutions Frank O'Connor.
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