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									U.S Individual Annuities

Executive Summary – First Quarter 2011

John B. Sullivan
(860) 285-7758
jsullivan@limra.com




This publication is a benefit of LIMRA membership.
No part may be shared with other organizations or reproduced in any form without LIMRA’s written permission.
Industry Highlights

 Total Annuity Industry

     Total annuity sales in the first quarter of 2011 were up 4 percent from the prior quarter and 16 percent from the
        same quarter of last year.

     Total annuity sales increased in consecutive quarters for the first time since 2007.
 Variable Annuities (VA)

     Quarterly VA sales increased 3 percent from last quarter and 24 percent compared to Q1 2010.
     VA sales of $39.8 billion in the first quarter were the highest since the second quarter of 2008 ($42.2 billion).
 Fixed Annuities

     Quarterly fixed annuity sales increased 4 percent from last quarter and 5 percent compared to Q1 2010.
     Indexed annuity sales decreased 13 percent or $1.1 billion from last quarter and were the lowest since the first
        quarter of 2010. This was the largest dollar decline in the product’s history.

     Fixed-rate deferred annuity sales increased 26 percent from the prior quarter and were the highest since Q4 2009.




                                                                                                                          2
U.S. Individual Annuity Sales
•First quarter 2011 total annuity sales were the highest individual quarter since Q2 2009.

•Variable annuity sales increased in consecutive quarters for the first time in four years.


                                                                       Variable
        $67.7
                                                                       Fixed
                       $61.3
                                                               $57.0                  $57.9    $60.0
                                $55.5    $54.1                            $56.0
                                                    $51.5
        31.0
                       32.1
                                 31.9                           35.2       34.6        38.5     39.8
                                          33.0
                                                    32.2



        36.7
                       29.2
                                 23.6    21.1                   21.8       21.4                 20.2
                                                    19.3                               19.4



     1Q 09         2Q 09       3Q 09    4Q 09    1Q 10      2Q 10       3Q 10      4Q 10      1Q 11

 Dollars in billions                                                                                   3
Industry Sales Estimates
 •Seven of the top 10 companies for VA sales increased sales from the prior quarter,
 while nine of those companies had higher sales than Q1 2010.
 •Eight of the top 10 companies for fixed annuity sales increased sales from the same
 period of 2010.


                                                                                        % Change     % Change
                               Q1        Q2        Q3        Q4     Full Yr      Q1      Q1 2011 /    Q1 2011 /
                             2010      2010      2010      2010      2010      2011       Q4 2010      Q1 2010

 Variable

    VA Separate Account      $24.8    $27.1     $26.7      $29.7    $108.3     $32.2           8%         30%

    VA Fixed Account           7.4      8.1       7.9        8.8      32.2       7.7           -13           4

 Total Variable               32.2     35.2      34.6       38.5     140.5      39.8            3           24

 Fixed

    Book Value                 7.9      8.4       7.4        6.6      30.3       8.7           32           10

    MVA                        1.3      1.6       1.8        1.4       6.1       1.4            0            8

    Indexed                    7.0      8.2       8.7        8.2      32.1       7.1           -13           1

 Fixed Deferred               16.2     18.2      17.9       16.2      68.5      17.2            6            6

    Fixed Immediate            1.7      2.1       2.0        1.8       7.6       1.8            0            6

    Structured Settlements     1.4      1.5       1.5        1.4       5.8       1.2           -14          -14

 Total Fixed                  19.3     21.8      21.4       19.4      81.9      20.2            4            5

 Total                       $51.5    $57.0     $56.0      $57.9    $222.4     $60.0           4%         16%


                                                                                                                  4
Dollars in billions
Fixed Deferred Annuity Sales
  •Indexed annuity sales declined by the largest amount ($1.1 billion) in the product’s history. The
  percentage decline of thirteen percent was the steepest quarterly decline since 2003.
  •Nine of the top 10 companies for fixed-rate deferred annuity sales increased sales from the prior
  quarter.


      $33.2                                                                                   Indexed

                                                                                              MVA
        7.2
                      $25.8
                                                                                              Book Value

                                $20.5
       7.0            8.2                 $18.0               $18.2      $17.9                $17.2
                                                    $16.2                          $16.2
                                7.5
                      3.5
                                          7.0                  8.2
                                                    7.0                  8.7                   7.1
                                2.4                                                 8.2
      19.0                                1.5                                                  1.4
                                                    1.3       1.6
                                                                         1.8
                      14.1                                                          1.4
                                10.6      9.5       7.9       8.4        7.4                   8.7
                                                                                    6.6



   1Q 09         2Q 09        3Q 09     4Q 09     1Q 10     2Q 10     3Q 10      4Q 10     1Q 11
                                                                                                           5
Dollars in billions
Immediate Annuity Sales
  •Fixed immediate product sales of $1.8 billion were even with the prior quarter, and sales have
  ranged between $1.7 and $2.1 billion the past 14 quarters.

  •Structured Settlement annuity sales were the lowest quarterly total in over 10 years.

                                     Structured Settlements
                                     Fixed Immediate
                                     Variable Immediate             $3.6
        $3.5         $3.4                                                    $3.5
                                  $3.1         $3.1        $3.1                       $3.2
                                                                                               $3.0

                                                                    1.5      1.5
        1.6          1.4
                                  1.3          1.3         1.4                        1.4      1.2




        1.9          2.0                                            2.1      2.0
                                  1.8          1.8          1.7                       1.8      1.8




   1Q 09        2Q 09        3Q 09        4Q 09        1Q 10      2Q 10    3Q 10    4Q 10    1Q 11
                                                                                                      6
Dollars in billions. Amounts less than $0.1 billion not shown.
Deferred Annuity Sales by Market Type
 •IRA annuities have led sales by market type for the past 8 quarters.
 •IRA and nonqualified annuity sales increased 23% and 21%, respectively, from one year ago.

                                                                       Employer Plan
                                                                       IRA
       $64.2
                                                                       Nonqualified
                      $57.9                                                                     $57.0
        9.3                                                   $53.4                   $54.7
                                $52.4     $51.0                          $52.5
                      9.1                           $48.4
                                                                                                 8.0
                                                                                       7.7
                                 8.8                          8.3         7.9
                                          8.9
                                                    8.3
        26.8
                      25.2                                                                      27.1
                                                              25.2                    26.8
                                23.3      22.9                           25.8
                                                    22.0



        28.1
                      23.6      20.3                                                  20.3      21.9
                                          19.2      18.1      19.9       18.8



   1Q 09         2Q 09        3Q 09     4Q 09     1Q 10     2Q 10     3Q 10      4Q 10        1Q 11
Dollars in billions                                                                                     7
Deferred Annuity Sales by Market and Product Type
            Nonqualified                IRA           Employer Plan

                                                                       $20.4       •IRA annuities continue to be the top selling market
   $14.6
                                                                                   type for variable deferred annuities. VA IRA sales
                                                                       12.5        increased in Q1 2011 by 34 percent from Q1 2010.
    8.9
                                                                        7.0        •Nonqualified annuities remain the top selling market for
     7.5                                                                           fixed-rate deferred products, capturing 65 percent of
                                                                                   Q1 2011 sales.

                                                                                   •Indexed annuities continue to be predominantly sold in the
   1Q 09   2Q 09      3Q 09   4Q 09   1Q 10   2Q 10   3Q 10   4Q 10    1Q 11
                                                                                   IRA market, accounting for 57 percent of sales in Q1 2011.
                      Variable Deferred Annuities


                                                                                              Nonqualified             IRA            Employer Plan
            Nonqualified                IRA            Employer Plan

 $16.2                                                                                $3.0                                                            $4.1


    8.3
                                                                      $6.6            3.0                                                              2.9

                                                                       2.7
                                                                                      0.2                                                              0.2
     1.5
                                                                             0.9
                                                                                      1Q 09   2Q 09   3Q 09   4Q 09   1Q 10   2Q 10   3Q 10   4Q 10   1Q 11
   1Q 09   2Q 09   3Q 09      4Q 09   1Q 10   2Q 10   3Q 10   4Q 10    1Q 11

                   Fixed-Rate Deferred Annuities                                                      Indexed Deferred Annuities


                                                                                                                                                              8
Dollars in billions
1Q 2011 Sales by Distribution Channel
                                                                                                     Total Annuity Sales
  •Independent Broker Dealers led all distribution channels in total
                                                                                                                   $1.9
  annuity sales. Previously, Career Agents had led in overall sales                                         $4.3
  for over two years.                                                                                                          $13.5

  •Independent Broker Dealers hold a firm grasp as the                                          $9.0
  top selling distribution channel for variable annuities, having
  led in quarterly VA sales since Q3 2005.

  •Independent Agents continue to lead all distribution channels                                 $9.3                              $12.2
  in fixed annuity sales and have done so for the past 27
  consecutive quarters.
                                                                                                                   $9.8



        Independent BDs         Career         Banks        Independent Agents   Full Service Nat'l BDs                   Direct       Other


                        Variable Annuity Sales                                      Fixed Annuity Sales
                                      $0.6
                                                                                              $0.6
                                    $2.0                                                  $1.1
                                                                                   $1.3
                             $3.6
                                                    $12.5
                                                                                 $1.4                         $7.4
                      $4.4


                                                                                 $3.1

                         $7.7
                                             $9.1
                                                                                                     $5.4


                                                                                                                                               9
Dollars in billions
Variable Annuity Sales by Distribution Channel
•Independent Broker Dealers continue to lead variable annuity sales by distribution channel and
captured 31 percent of VA sales in Q1 2011.

•Career agents have been the second leading channel for VA sales in all quarters since 2005.



                                                                            $12.5
                                                                                        Independent BDs


    $9.5                                                                                Career Agents
                                                                             9.1

                                                                             7.7        Full Service Nat'l BDs
    7.2


    5.5                                                                                 Banks

    4.0                                                                      4.4
                                                                                        Direct Response
    2.8
                                                                             3.6
                                                                             2.0        Independent Agents
    1.3
    .7                                                                       0.6
                                                                                        Other Systems

  1Q 09        2Q 09   3Q 09   4Q 09   1Q 10    2Q 10     3Q 10    4Q 10    1Q 11

                                                                                                                 10
Dollars in billions
Fixed Annuity Sales by Distribution Channel
•Independent Agents accounted for 83 percent of indexed annuity sales in Q1 2011 and
continue to drive the channel to lead in overall fixed sales.
•Fixed annuity sales in Banks increased by the largest dollar value for any channel in Q1 2011,
with a 43 percent gain from the prior quarter .




     $10.5

                                                                                              Independent Agents
     10.0

     7.5                                                                                      Banks
                                                                                  $7.4

                                                                                              Career Agents
                                                                                5.4
                                                                                              Other Systems

  3.5
                                                                                 3.1          Full Service Nat'l BDs
   2.3
  1.8                                                                           1.4           Independent BDs
                                                                                       1.3
  1.1                                                                                  1.1
                                                                                       0.6    Direct Response

   1Q 09        2Q 09   3Q 09   4Q 09    1Q 10    2Q 10     3Q 10     4Q 10     1Q 11

                                                                                                                 11
Dollars in billions
Industry Deferred Annuity Assets and Net Flows Estimates – Q1 2011

• Total deferred annuity assets under management increased with overall asset growth of
  3.1 percent during the first quarter of 2011.
• Variable annuity assets had the highest asset growth during the quarter, increasing by 4.0 percent.
• Asset growth for fixed-rate annuity products was 0.1 percent and this was the fifth consecutive quarter
  where contract inflows were less than outflows.
• Indexed annuities had asset growth of 3.2 percent as contract inflows were significantly higher than
  contract outflows.

                                       Variable        Fixed-Rate             Indexed                   Total
  Beginning Assets                      $1,561.0             $473.5             $185.1             $2,219.6

  Inflows                                   41.0               10.4                 7.3                  58.7

  Outflows                                  40.3               11.7                 4.0                  56.0

    -Full Surrenders                        24.8                6.1                 2.4                  33.3

    -Other Outflows                         15.5                5.6                 1.6                  22.7

  Investment Earnings                       57.8                4.1                 2.5                  64.4

  OTHER                                      4.5                -2.2                0.1                   2.4

  Ending Assets                          1,624.0              474.1               191.0             2,289.1

  Average Assets In-force               $1,592.5             $473.8             $188.1             $2,254.4


 Dollars in billions                                                                                            12
About the Report

 This report provides industry data for individual annuity sales in the
  United States.

 Estimates are based on data from 59 participating companies whose
  sales represent 96 percent of the total market.

 The report includes information regarding the split of sales activity
  between product type, distribution channel, and market type.

 A participant’s report is only available to participating companies.




                                                                           13
Definitions
 Individual Annuity: An annuity contract between an insurance company and an individual (individual contracts
  can allow for joint owners as well as a trust for the benefit of an individual) or employer, in which the individual
  either owns the contract outright or controls features such as premium payments, withdrawals, asset allocation,
  transfers, beneficiary selection, and other contractual options. This definition includes all nonqualified annuities
  and generally would include annuities within the following arrangements:
             Traditional IRAs
             Roth IRAs
             Keogh plans
             Individual (k) plans
             SEP IRAs
             SIMPLE IRAs
     Individual annuity contracts within 403(b), 401(k), 457 (government) and pension trusts can often be
       included in this definition of an individual annuity. In some employer sponsored markets such as 403(b)
       plans, a group annuity product may be issued to the employer or plan sponsor, with employees receiving
       certificates of participation. To be considered an individual annuity, the sale would have to meet the
       following three criteria:
           The employee retains control as indicated above.
           The employee must make contributions. Contracts where the employer makes 100 percent of the
            contributions are excluded.
           A representative of the issuing insurance company directly solicited the employee’s participation.
           Employer sponsored plans funded by unallocated group contracts would not be considered individual
            annuities.

 Sales and premiums: Both terms refer to all money paid into an individual annuity in the year. This includes
  money paid into new contracts (with initial purchase occurring within a specific quarter during the year) and
  existing contracts (where initial purchase occurred prior to the reported quarter).
 Variable annuity: All funds sold within a variable annuity contract, including fixed account(s) within VA
  products.

 Fixed annuity: Stand-alone product in which a minimum interest rate is guaranteed. Does not include fixed
  account(s) within variable annuities. ―Fixed‖ will include all types of fixed product-types (deferred, immediate
  and structured settlements).

 Fixed-Rate: Subset of fixed annuities which excludes indexed annuities.                                                14
Definitions (continued)
 Indexed annuity: Has a guaranteed principal with returns that are tied to a specific index, generally the S&P
  500.
 Market value adjusted annuity: Stand-alone fixed-rate product in which the surrender value fluctuates
  depending on changes in the interest rate market in relation to the guaranteed interest rate.
 Structured settlements: Single premium contracts purchased by property and casualty companies to
  distribute damage awards to claimants of personal injury or wrongful death lawsuits over a period of time, rather
  than as a lump sum.
 Nonqualified annuity: Invested monies subject to federal income tax (excluding Roth IRA monies).
 IRAs: Includes premium for both Roth IRA and traditional IRA contributions, rollovers and transfer monies.
 Employer plan annuity: Invested monies qualified for federal income tax deferment and are related to
  employer based plans including Keoghs, SEPs, SIMPLEs, 403(b), 401(k), Individual (k) and 457 deferred
  compensation plans.
 Banks: Includes sales through banks, credit unions, and FINRA firms that market through banks and/or savings
  and loan companies (S&Ls).
 Career agents: Agents including multi-line exclusive agents, devoting at least 75 percent of their time selling
  one company's products. Companies generally provide financing, training, supervision, and office space.
 Direct response: Sales attributed to salaried employees, direct mail, and telemarketing. Employees may be
  paid incentives or bonuses; however, no commissions are paid.
 Full service national broker-dealer: Includes national wirehouses and large regional broker-dealers.
 Independent broker-dealers (IBD): Includes sales by representatives who sell through independent FINRA
  firms. Exclude national wirehouses and large regional broker-dealers, sales through a company's own broker-
  dealer, and FINRA that market through banks/S&Ls.
 Independent agents: Includes PPGAs and life brokers using company’s own broker-dealer. PPGAs are
  experienced, full-time producers who earn commissions plus overrides on personally produced business.
  Brokers have no primary relationship and are paid straight commissions only — no overrides. Also includes any
  other type of independent agent in this category.
 Other systems: Other systems can include structured settlements, third-party marketers, pension plan
  representatives, and relationships with other financial firms.                                                      15
Participating Companies
  AAA Life Insurance Company                 Horace Mann Life Insurance Company         Pacific Life

  AEGON USA                                  ING                                        Penn Mutual

  AIG Companies                              Jackson National Life                      Phoenix Life Insurance Company

  AVIVA                                      John Hancock                               Principal Life Insurance Company

  AXA Equitable                              Kansas City Life                           Protective Life

  Allianz Life of North America              Knights of Columbus                        Prudential Annuities

  Allstate Financial                         Liberty Life Assurance Company of Boston   RBC Insurance - Liberty Life

  American Equity Investment Life            Lincoln Financial Group                    Reliance Standard Life Insurance Company

  American Family Life Insurance Company     Massachusetts Mutual Life                  RiverSource Life Insurance

  American National Life                     MetLife                                    Security Benefit Life

  Americo Financial Life & Annuity Company   Midland National                           State Farm Life

  Bankers Life & Casualty                    Minnesota Life                             Sun Life Financial

  EquiTrust Life                             Modern Woodman                             Symetra Financial

  Farm Bureau Life Insurance Company         Mutual of Omaha                            TIAA-CREF

  Fidelity Investments Life                  National Life Group                        The Standard

  Forethought Life Insurance Company         Nationwide Life                            Thrivent Financial for Lutherans

  Genworth Financial                         New York Life                              UNIFI

  Great American                             North American Company for Life & Health   USAA Life

  Guardian Life of America                   Northwestern Mutual Life                   Western Southern Group

  Hartford Life                              Old Mutual Financial Network

                                                                                                                                   16
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                                     2011, LL Global, Inc.SM
                          300 Day Hill Road, Windsor, CT 06095-4761, U.S.A.
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