Banks Grab More of the Annuities Market, As Investors
Wall Street Journal (10/09/00) Vol. 104, No. 40 p.R29; Siegel, Tara

As more Americans grapple with the issue of retirement assets, banks are racing to fix the dilemma by increasing their share of the annuities market. In the wake of rising consumer anxiety over the prospect of outliving their retirement savings, banks are turning their attention toward annuities, which can provide a steady source of income for the duration of the buyer's lifetime. Evidence of this pattern is seen in the number of annuities sales last year. In 1999, total sales of all types of annuities reached $163.5 billion, up 24 percent from the year-earlier period. According to financial services consultant Kenneth Kehrer, banks accounted for 17 percent of the $49.9 billion in variable and fixed annuity sales in the second quarter. In addition, banks sold $8.5 billion in annuities in the second quarter, an increase of $7.6 billion in the first quarter, and $6.8 billion during the second quarter the previous year. Meanwhile, bank sales of various types of annuities surged 38 percent during the same period, beating the pace of overall annuities sales. Banks have also added variable annuities to their roster of products. Part of this may be attributed to the fact that variable annuities have experienced their own popularity surge among consumers, due mostly to the fact that variable annuities permit annuity holders to participate in the "go-go" stock market. But more than anything else, variable annuities would also offer banks another avenue from which they could generate much-needed revenue.


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