Appeal of Guaranteed Living Benefit Riders Grows in the Third Quarter, 2010

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WINDSOR, Conn., Dec. 1, 2010 – The election rate of variable annuities (VA) guaranteed living benefit (GLB) riders rose to 89 percent in the third quarter, according to LIMRA’s study, which represents 94 percent of the variable annuity GLB industry.

Third quarter sales generated $21 billion of new deferred VA premium resulting in year-to-date sales with GLB of $58.5 billion, three percent higher than during the first three-quarters of 2009.

“It was the second straight quarterly increase in sales of VAs with GLB riders, following a stretch of seven quarters of either declining or flat sales,” noted Dan Beatrice, senior analyst, LIMRA Retirement Research. “It now appears likely that VA sales with GLB riders will post an annual increase for 2010. On an annual basis, these sales had dropped each year since 2007.”

The guaranteed lifetime withdrawal benefit (GLWB) election rate increased to 65 percent. Guaranteed minimum income benefit (GMIB) riders were elected 18 percent of the time; guaranteed minimum accumulation benefit (GMAB) election rate increased to four percent in the third quarter of 2010.

The rate at which any GLB was elected increased four percentage points in the career distribution to reach 79 percent, while in the bank, independent and wirehouse channels, the rate was 91 percent in the third quarter.

VA assets with GLB increased 11 percent from $427 billion to $472 billion at the end of the third quarter. Most of the GLB asset growth occurred for GLWB and GMIB assets, which combined account for 83 percent of VA GLB assets. Total VA assets increased eight percent from $1.358 trillion mid-year to $1.460 trillion at the end of the third quarter.

LIMRA’s Variable Annuity Guaranteed Living Benefit Election Tracking Survey collects VA GLB sales, election rates and assets on a quarterly basis.


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