Sales of annuities through banks in April 2010 managed to maintain a modest recovery since hitting record lows at the beginning of the year. Variable sales dropped from March levels, but fixed annuity sales rose inversely and kept total annuity sales even month-to-month.
Financial institutions sold $3.3 billion of fixed and variable annuities in April, which matched March levels but were 26 percent short of the sales level reached the previous April when total annuity sales were $4.4 billion.
According to the Kehrer-LIMRA Bank Fixed Annuity RateWatch, the spread between the yield on five-year CDs and the average effective yield offered by fixed annuities guaranteed for five years has turned upside down in recent months. The difference between the two products fell from 94 basis points in April 2009 to 8 points in April 2010. , “In May the rate spread between five-year CDs and five-year annuities inverted to negative 6 – fixed annuities were 6 basis points below CDs. This does not bode well for fixed sales in May” continued Cappelletti.