For the first time in two years, all fixed annuity types posted a sequential sales gain in the second quarter of 2013. Market value adjusted fixed annuities are up 35% over the previous quarter, based on a fixed annuity premium study conducted by Beacon Research in Evanston, Illinois.
Jeremy Alexander, CEO of Beach Research says the rates are higher and there are sales to back them up, leading to tremendous growth in the MVA category. Additionally, the study showed good numbers in index sales, up 17% from last quarter.
Alexander says that rates are driving these gains. The 10 year treasury has gone up and there are better spreads for carriers, so they're seeing money. Alexander says that's really where the growth typically comes from. "If the carriers aren't making any money, they're not putting supply onto the street and even if there's a lot of demand out there, there won't be sales to back it up," he says.
As nobody knows where the rates are going, Alexander says we'll have to hold on and see if rates continue.
The study also showed gains in the DIA maket, up over 150%. Alexander says this is a small portion of the fixed income market but there's been a tremendous amount of interest, primarily from the big mutuals. "This is an interesting trend that I think has legs," Alexander says. This is a tremendous opportunity for carriers to get into this market, he adds.