Equity-Indexed Annuity Sales Strong, Despite Stock Slump.While the downtrodden down·trod·den adj. Oppressed; tyrannized. downtrodden Adjective oppressed and lacking the will to resist Adj. 1. stock market eroded e·rode v. e·rod·ed, e·rod·ing, e·rodes v.tr. 1. To wear (something) away by or as if by abrasion: Waves eroded the shore. 2. To eat into; corrode. sales of variable annuities Variable annuities Investment contracts whose issuer pays a periodic amount linked to the investment performance of an underlying portfolio. in the first quarter of 2001 compared with the previous quarter, sales of equity-indexed annuities equity-indexed annuity A contract with an insurance company that promises periodic payments keyed in a specified manner to a stock market index. Unlike variable annuities, equity-indexed annuities specify a guaranteed minimum return that is typically 3%. have weathered the storm much better. First-quarter sales were $1.26 billion, the same as in the fourth quarter of 2000, said Jack Marrion, president of Advantage Group, St. Louis Louis, titular duke of Burgundy Louis, 1682–1712, titular duke of Burgundy; grandson of King Louis XIV of France. He became heir to the throne on the death (1711) of his father, Louis the Great Dauphin. , which tracks the equity-indexed annuities industry. But sales were down sharply from the $1.5 billion sold in the first quarter of 2000. Marrion said he was surprised by the first-quarter result, which he expected to be off 20% from the previous quarter. "I'd I'd 1. Contraction of I had. 2. Contraction of I would. I'd I had or I would I'd have ~would like to say the reason it happened was that people realized that with EIAs, they can't lose prior credited earnings, despite what the stock market is doing," he said. "But I think the real answer is that fixed rates fell, so the potential returns of EIAs looked better than actual falling fixed rates." As for the drop from last year's first quarter, that was a record sales quarter for equity-indexed annuities, with many new buyers, and at that time, the real stock-market misery hadn't had·n't Contraction of had not. hadn't had not hadn't have yet kicked in, Marrion noted. Fixed rates were still high, and they actually peaked late in the second quarter, he said. Insurance agents still dominate distribution, with more than 96% of equity-indexed annuity sales. Annual reset methodologies--those that calculate gains annually from the market index's level at the beginning of the anniversary year--represented 86% of total sales. Equity-indexed annuities with surrender periods of 10 years or more represented 76% of first-quarter sales, up from 64% a year earlier. Marrion also reported that although 10 carriers have introduced products using multiple indices, the S&P 500 Index still is used in 96% of equity-indexed annuity sales. Sales of Equity-Indexed Annuities, 1st Quarter 2000 Allianz was the equity-indexed annuities leader for the first quarter Allianz Life $236,050,000 Midland National 172,400,000 American Equity 151,893,840 Jackson National 108,551,575 Conseco Annuity Assurance 84,212,494 AmerUS Group 79,404,405 ING USG 71,572,331 Fidelity & Guaranty 66,000,000 Americo 37,124,392 Life Ins. Co. of the Southwest 33,704,162 Source: The Advantage Group |
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