The Depository Trust & Clearing Corporation (DTCC) Insurance & Retirement Services (I&RS) released today full-year and December information on activity in the market for annuity products from its award-winning Analytic Reporting for Annuities online information service, which leverages data from the transactions that DTCC processes for the industry. Analytic Reporting for Annuities is a service offering of National Securities Clearing Corporation, a DTCC subsidiary.
The charts for this release can be viewed at: http://www.dtcc.com/news/press/releases/2012/dec.pdf.
- Inflows processed by DTCC in 2011 totaled over $90 billion
- DTCC processed nearly 45 million transactions categorized as inflows and out flows in 2011
- Net flows in 2011 totaled almost $24 billion
- Inflows for all annuity types processed in December increased nearly 13%, or over $860 million, to $7.8 billion from $6.9 billion in November.
- Subtracting out flows from inflows, net cash flows decreased 2.5% to $1.84 billion in December from $1.9 billion in November.
- The top 10 insurance companies accounted for over 69% of all inflows processed in December and over 68% of all inflows processed in 2011.
- Five hundred sixty one (561) annuity products saw positive net flows in December, while 2,264 annuity products saw negative net flows, where the amount redeemed exceeded the amount invested.
- For the full year, 700 annuity products had positive net flows and 2,450 experienced negative net flows.
The overall trend in inflows has been slightly down for the year, while the trend in net flows has been slightly up.
Transactions processed by DTCC show an increasing percentage of inflows being directed into IRA accounts in 2011, and a decreasing percentage of inflows directed into non-qualified accounts. Non-qualified accounts are receiving less than 40% of cash flows. After remaining relatively flat for the past several months inflows into 401(k) plans jumped from $392 million in November to almost $749 million in December.
Looking at the net cash flow (subtracting out flows from inflows) distribution displays the greater persistence, or “stickiness,” of investments into qualified plan accounts. In 2011 regular IRA accounts took the lion’s share of positive net flows with 77%. 401k plans attracted 13%, and non-qualified accounts attracted only slightly less than 6% of positive net flows, far from the 39% of inflows going into these accounts.
DTCC-RIIA Agreement
In August 2011, DTCC joined forces with the Retirement Income Industry Association (RIIA) to analyze cash flows by RIIA-defined broker/dealer distribution channels and product categories. For the six distribution channels defined by RIIA, the following are the percentages of inflows processed by the I&RS in December:
- Independent broker/dealers – 25%
- Wirehouses – 23%
- Regional broker/dealers – 15%
- Bank broker/dealers – 12%
- Insurance broker/dealers – 9%
- Others – 16%