The value of variable annuity sales rose to £445 million in the first half of 2010, an increase of 34 per cent compared to the 2nd half of 2009, according to research by Towers Watson.
The value of variable annuity sales was relatively even between the first two quarters of 2010, at £222 million and £223 million respectively.
But sales this year remain on course to fall well short of 2008 when £1.15bn was placed into the products, and the £1.045bn of sales in 2009.
So-called ’third way’ products could be appropriate for a sizeable segment of consumers both approaching and at retirement, says Towers Watson. The consultant says the sector could therefore present a significant commercial opportunity for product providers.
Andy Sanders, senior consultant at Towers Watson, says: “It is encouraging that there has been a bounce in sales compared to the second half of 2009. However those sales were much reduced relative to the first half of 2009, prompted by product redesigns and the exit of the Hartford from the market place as a result of the impact of the financial crisis. With first and second quarter sales in 2010 so similar, and below comparable levels of 2009, consumers and advisers may need reminding of the virtues of ’third way’ propositions like variable annuities as alternatives to conventional annuities and income drawdown.
“Currently, reaching billion pounds of sales of 2008 and 2009 is looking challenging for this year. It will be interesting to see what impact further innovation and new product launches have on sales in the remainder of 2010.”
