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Evanston, IL, —Despite a difficult interest rate environment, income annuity sales grew almost 18% in fourth quarter and nearly 7% in 2011, according to estimates from the Beacon Research Fixed Annuity Premium Study. This growth gave them a record-high 13% of fourth quarter’s sales.  Indexed annuity results held their own, claiming a 48% share of the quarter’s sales – also a record high.

“Income annuities did remarkably well, considering that lower interest rates and a flatter yield curve reduced payouts,” said Jeremy Alexander, CEO of Beacon Research.  “Income annuities generally provide the most retirement income bang for the buck. Sales results indicate that advisors and their clients are becoming aware of how these products can be used to create a personal pension. Similarly, guaranteed lifetime income benefits helped sustain indexed annuity sales despite lower cap or participation rates.”

Total annual fixed annuity sales were resilient during the difficult conditions of 2011, falling just 1.1% to $75.6 billion. Income annuity results advanced 6.6% to $8.5 billion. Indexed annuities did about the same at approximately $33 billion. Fixed rate non-MVA[1] annuity sales of $28.1 billion and MVA sales of about $6 billion were down 3.1% and 5.5%, respectively.

Fourth quarter’s fixed annuity sales also held up surprisingly well on a period-to-period basis, declining only 1.7% to $17.3 billion.  At $2.2 billion, income annuities were up 17.6%.  Indexed annuity and fixed rate MVA results were essentially flat at $8.4 billion and $1.3 billion, respectively.  Fixed rate non-MVA sales decreased 10.3% to $5.4 billion. Overall sales fell 8.8% from third quarter, with weaker results for all product types.

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