Variable annuity net new sales to reach USD22bn by 2018, says Cerulli
Variable annuity net new sales will reach USD22bn by 2018, a 57 per cent increase from 2012 levels, according to global analytics firm Cerulli Associates.
"Net new variable annuity sales plummeted in 2012 to just USD14bn," says Donnie Ethier, associate director at Cerulli. "However, as interest rates stabilise, we envision legacy variable annuity providers and new entrants, including non-traditional players, to join the marketplace."
Cerulli's Annuities and Insurance 2013: Balancing Shrinking Supply and Increasing Demand for Guarantees report, which leverages continuous analysis of the variable annuity, insurance, and insurance sub-advisory marketplaces, focuses on three key areas of the annuities and insurance markets: distribution, product development and asset management.
"We have confirmed that private money continues to circulate in the annuity industry," Ethier says. "Consumer demand for guaranteed income is too high for firms to ignore, and many believe they can address the opportunity with greater efficiency."
In order to continue to strengthen net sales and the industry's producer base, Cerulli emphasises the need to attain new sources of assets. This may be achieved by attracting fee-based advisors, getting younger generations to consider the solution, or by constructing in-plan guarantees.
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