Variable Annuity Assets Decline on Slump in Equities
Bloomberg, May 29th, 2009
Assets in U.S. variable annuities
declined 5.4 percent in the three months ended March 31 as stock
markets plunged and savers scaled back purchases.
Total assets were $1.07 trillion at the end of the first
quarter compared with $1.13 trillion on Dec. 31, said NAVA Inc.,
a trade group for companies that sell the retirement products,
in an e-mailed statement today.
Funds backing variable annuities are generally invested in
stocks, and when markets decline the losses can be shouldered by
both savers and the insurers that sell the products. Sales fell
by 27 percent in the first quarter compared with a year earlier,
NAVA said, mirroring data earlier this week from LIMRA, another
industry group.
The Standard & Poor’s 500 Index dropped 38 percent last
year, its worst performance in at least half a century as the
U.S. fell into recession. The index is up 1.8 percent this year
after a decline of 12 percent in the first quarter.
The variable annuities slump has depleted capital at life
insurers across the industry, prompting carriers to scale back
their offerings. That’s created opportunity for MetLife Inc.,
which is boosting sales even as the contracts weigh on results.
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