Bank annuity premiums up in 2001. (Briefing).

Bank sales of individual annuities grew to $38.3 billion last year, up from $31 billion in 2000, a 23.5% increase, with fixed annuities leading the way.

Banks sold $27.4 billion of fixed annuities last year, up 78% from 2000, according to data compiled by Kenneth Kehrer Associates, a consulting firm in Princeton, N.J., that tracks bank sales of annuities and life insurance. Bank sales of variable annuities were down 30.1% to $10.9 billion, the first decline since Kehrer began tracking those premiums in 1990.

Fixed annuities benefited primarily from a "flight to safety" away from the sinking stock market, said President Kenneth Kehrer. But the shape of the yield curve of fixed securities also played a big role, he said. As the Federal Reserve Board reduced short-term interest rates through the year, longer-term rates remained higher. Kehrer said that when the yield curve is normal, safety-conscious investors can obtain interest rates 50 to 75 basis points higher in fixed annuities than in bank certificates of deposit, but when it is steep, the fixed annuities pay much higher rates. In the last several months, fixed annuities paid more than twice the rate paid by certificates of deposit, he said.

2001 Fixd Annuity Premiums Through Banks

Rankings are based on full-year premiums for 2001

($ Millions)

                      Full Year   % Change
Insurer               '01 Fixed  from 2000

AIG/American General     $5,475        58%
Aegon/Transmerica         3,937        67%
GE Companies              1,958        43%
Nationwide                1,766       246%
Allstate Life Group       1,434         1%
Jackson National          1,356       161%
Keyport                   1,276        19%
John Hancock              1,269        71%
Lincoln National          1,263       879%
Western-Southern            929       101%

Source: Kenneth Kehrer Associates