Annuity IQ

Monday June 16, 6:00 am ET

RESTON, Va.–(BUSINESS WIRE)–NAVA, the Association for Insured Retirement Solutions, announced today first quarter results for the variable annuity industry. The combined net assets of U.S. variable annuities decreased 6.0% to $1.40 trillion at the end of the first quarter, as compared with the end of the fourth quarter of 2007. Net assets increased by 0.5% relative to the first quarter one year ago.

Table 1. variable annuity Net Assets

(Dollars in Millions) 3/31/08 12/31/07 3/31/07

Total Net Assets $1,396,576 $1,485,202 $1,389,880

Source: Morningstar, Inc.

variable annuity total sales, also known as premium flows, for the first quarter was $41.6 billion, a 1.7% increase from the first quarter of 2007. First quarter net sales, also known as net flows, of $7.2 billion showed an increase of 12.3% from first quarter 2007 net sales of $6.4 billion. The mix in premiums for the first quarter showed that 64.2% of the total sales were in qualified plans and 35.8% in non-qualified plans.

Table 2. variable annuity Total Sales1

Quarter Ended

(Dollars in Millions) 3/31/08 3/31/07

Total Net Asset $41,644.0 $40,949.8

Net Sales $7,215.5 $6,425.5

Source: Morningstar, Inc.

Table 3. Quarterly variable annuity Total Sales & Net Sales

Quarter Ended

($ Millions) 3/31/08 12/31/07 9/30/07 6/30/07 3/31/07
Total Sales $41,644.9 $47,828.5 $46,215.8 $47,253.6 $40,949.8
Net Sales $7,215.5 $8,912.3 $9,375.0 $8,669.8 $6,425.5

Net Sales as % of total sales 17.3% 18.6% 20.3% 18.3% 15.7%

Source: Morningstar, Inc.

The mix of net assets by investment objective showed that $783.5 billion, or 56.1% of $1,396.6 billion total assets, was held in equity accounts. This is a decrease of 6.1% as compared with the first quarter of 2007 when $834.0 billion, or 60.0%, was held in equity accounts. The mix also shows that $262.9 billion, or 18.8% of assets, was held in fixed accounts.

Table 4. variable annuity Assets by Asset Class

(As a percent of total assets) 3/31/08 3/31/07

Equity 56.1 % 60.0 %
Fixed Accounts 18.8 18.6
Balanced 12.1 10.6
Bonds 9.6 8.2
Money Market 3.4 2.6

Source: Morningstar, Inc.

About annuities — With the decline in availability of employer sponsored pension plans and proposed changes to Social Security, an annuity is an integral component of a retirement plan. It is a long-term retirement investment vehicle offering a combination of insurance benefits, guaranteed lifetime income payments and tax-deferred savings. variable annuities allow individuals to invest in a variety of underlying fixed and equity funds, and provide returns based on the performance of these funds. Only annuities protect retirement assets against market volatility and guarantee retirement income that cannot be outlived.

About NAVA — NAVA, the Association for Insured Retirement Solutions, is a non-profit trade association located in suburban Washington D.C. NAVA provides a variety of services to the industry including educational forums, research, and conferences aimed at furthering the development and understanding of fixed and variable annuities, income annuities and variable life insurance.

1 Total Sales (also called total premium flows) represents the sum of new sales (all first-time buyers of a contract, including inter- and intra-company exchanges) and additional premiums from existing contract owners. Net Sales (also called net flows) represents Total Sales minus surrenders, withdrawals, inter- and intra-company exchanges, and benefit payments.