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Variable annuity net new sales will reach $22bn by 2018: Cerulli

As interest rates stabilize, we envision legacy variable annuity providers and new entrants to join the marketplace, Cerulli says

March 10, 2014 11:50 IST | India Infoline News Service
According to global analytics firm Cerulli Associates, variable annuity net new sales will reach $22 billion by 2018, a 57% increase from 2012 levels.

"Net new variable annuity sales plummeted in 2012 to just $14 billion," states Donnie Ethier, associate director at Cerulli. "However, as interest rates stabilize, we envision legacy variable annuity providers and new entrants, including nontraditional 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 subadvisory 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 explains. "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 emphasizes 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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